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It was repaired in Sonic X & I'm building it on Big City Stories as I think of it as a restoration
Going on what I said above, I think that Station Square is just a major district of Central City, along with Westopolis and the major sections from SA2 and Shadow's Central City level, kind of like how real life Tokyo is massive and has lots of different districts, some even far away from each other, like London and/or New York on steroids.
Chaos only destroyed the Station Square district of Central City and the rest of it was left intact. Maybe that's what the smaller town section of Central City across the river in SA2 is, next to the ghost mountains: we just don't visit it in game outside of cutscenes in the fixed areas as it's still being repaired.
The mountains and desert are probably meant to be part of the Mystic Ruin, but not near the jungle area and Angel island's original resting place from SA1.
Sonic X seems to be going with that too seen as how it does get rebuilt at the start of the SA2 adaption.
So, while its being repaired and Rebuilt in SA2, we don't see Station Square & Executive Order 11378 was put into effect in which a series of battle robots are to be built by the government which are designed to battle against Dr. Eggman.
It's my guess that before SA2, Eggman feared the Government's new battle robot designs, so he hacked into GUN's Main Computers to create a countermeasure but then he encountered a fact: "Earth was the world he was born in, not Mobius." As it was the birthplace of Gerald Robotnik, the Government's greatest scientist before the ARK suffered a terrible accident. Eggman uses a familar password from GUN's data to access Gerald Robotnik's Diary, downloads it via hacking Therefore stealing the data on Project Shadow, then deletes the original file from GUN's host computer thus setting the stage for SA2.
Except that Earth was always Eggman and even Sonic's home in the games; Mobius was made up for the USA and PAL versions of the classic games and only existed in Japan via Sonic X and the Japanese dub of AOSTH.
It's more likely he did hack into GUN's network and takes his grandpa's diary back as you say, just like in Sonic X, but was surprised only to find his grandpa's diary there, not that he was from Earth. Fitting too considering it's never stated if he knew it was there to begin with. or if Gerald's research was for the goverment all along, though he likely did know about his murder, that of Maria's and the ARK staff's.
That's the reason why he wanted to make the Eggman Empire; to run a stable world and prevent people's familes from being devestated by corporate and governemnt greed. Only he went full Andrew Ryan and has been hypocritical in those actions several times throughout the series.
A part of Station Square was engulfed by the Time Eater in Generations and ended up in the void which was Speed Highway.
And when the city was flooded by Chaos, except he was much weaker due to gameplay reasons; they wanted him as a mid game boss, but Sonic wouldn't have every chaos emerald at that point. I don't think it's possible to activate Super Sonic in bosses outside the Final Boss anyway in Generations.
My guess is that in the End of Generations, all of the locations that were trapped in the void were returned after the Time Eater's defeat.