In the game, the four protagonists are shrunk in size following a science experiment and must survive in a backyard, combating against various bugs and insects.

In the game, the player character (Max, Willow, Pete or Hoops) needs to consume an adequate amount of food and water, or they will lose health due to starvation or dehydration respectively.

Throughout the game, players need to scavenge resources in the world in order to construct a base so as to defend themselves from hostile enemies, in particular during nighttime as some of the insects become more aggressive.

[6] The resources can also be used to craft different tools, traps and weapons, such as axes, spears and bows and arrows, to defeat enemies.

The teens wake up to find themselves shrunken down to the size of a small insect and trapped in a backyard, but have no memory of how they were shrunk or how they ended up in the yard.

As the teens explore the yard, they come across recordings left behind by a scientist named Dr. Wendell Tully (Zachary Levi), who invented the SPAC.R, which can shrink objects and people.

Despite its memory loss, BURG.L assists the teens by providing them blueprints and knowledge on how to survive in the wilderness and defend themselves from hostile insects.

Once they were shrunk and the experiments were complete, the project's leader Director Dalton Schmector (Roger Craig Smith) ordered the teens to be disposed of.

Ominent was experimenting on children since they appeared to be immune to the effects of Raisining Syndrome, and managed to find a cure.

Dr. Tully further explains that Schmector used to be his supervisor before he left the company to work on the SPAC.R, and is angry that Ominent already built their own version.

However, Dr. Tully also warns the teens that once they start mixing the formula, Ominent will become aware of it and send their army of mind controlled insects to attack.

If the robot is defeated, the teens will recover a disk containing all of Ominent's research data, including a cure for the Raisining Syndrome.

Following the release of Pillars of Eternity II: Deadfire, the team at Obsidian Entertainment began brainstorming ideas for a survival game.

While the majority of the staff in Obsidian worked on The Outer Worlds, a small team of 13 people began the production of Grounded.

[4] The game's director, Adam Brennecke, compared the setting to a "theme park", as the team added numerous landmarks into the world with the goal of making it more interesting.