This realm seems to take place in a volcano. There is magma everywhere, and parts of the track crumble when driven on. The Lava Realm was the 4th realm the humans entered. This realm was the second and last to take place between "Ignition" and "The Speed of Silence", at least that we know of.
The skill for this realm is to understand how the track affects your tires. The Drones won this realm. Monkey also took back a racing drone tire that Dr. Tezla later uses to create morphing-tires for the drivers.