From Sonic Retro

The locations of the Sonic the Hedgehog universe are some of the most diverse (and confusing) due to the series' many continuities. Initially, Sega began two different storylines to localize Sonic as a product, as described in the Japanese and western game manuals respectively. For example, although "Dr. Eggman" has always been the antagonist's name in Japan, he was originally called "Doctor Ivo Robotnik" in North America, Europe, Australia and New Zealand. Also, in the Japanese manuals it is said that the games are set on Earth, specifically, on islands in the Pacific; however, according to some English manuals printed before 1999, the games are set on a different planet called Mobius. So there are in fact two storylines/canons recognized by the fanbase in its entirety, and many storylines that have expanded on them.

However, at the beginning of the Dreamcast era, Sonic Team chose what storyline they wanted to expand on with the newer generation games, and they chose the Japanese one, making it the international canon while discontinuing the old western canon.

In addition, "alternative" continuities, such as Sonic the Comic, Sonic Underground and Adventures of Sonic the Hedgehog have introduced places not in either of the normal canons.