The poem follows the story of Beowulf, a heroic Geat who comes to help Hrothgar, king of the Danes, after Hrothgar's kingdom is put under threat by a monster called Grendel. Grendel attacked Hrothgar's great hall and killed many of his men—which is why Beowulf takes on the task of killing Grendel. However, Grendel's mother later attacks the hall in order to take revenge for her son. This is why Beowulf then proceeds to also kill Grendel's mother.
It is when Beowulf travels to find and kill Grendel's mother that the reader finds out where Grendel's mother lives, as this is when Grendel's mother's lair is described within the poem. The poem tells us that Grendel's mother lives in a cave. However, unlike many caves, this cave is located under water: it is located below a lake. We also learn that the lake, where Grendel's mother lives, is very dangerous: "The water was infested with all kinds of reptiles." The author tells us that it takes Beowulf quite some time to swim there, as "it was the best part of a day before he could see the solid bottom." This clearly indicates that we can safely assume that this is a very big lake.