What is the significance of Wounded knee? Where is it?

Wounded Knee refers to a location in the state of South Dakota as well as a massacre which occurred there in the year of 1890. There is a body of water called Wounded Knee Creek in what is now known as the Lakota Pine Ridge Indian Reservation, but prior to the establishment of Reservations in the United States, this was territory of the Oglala Nation. 
In 1889, the Pine Ridge Reservation was established out of territory previously part of the Great Sioux Reservation. There was much conflict surrounding the founding of reservations, and many First Nations (American Indian) people were slaughtered or uprooted from their homes. Lands were seized by the United States government and the American Bison (a very important resource for the First Nations) were killed in such large numbers by American settlers that they almost went extinct. Reservations were intended to be spaces where First Nations people could maintain their traditional lifeways independent from the United States government. Unfortunately, the government was the entity appointing the location of the reservations and forcing First Nations people to move onto them. 
A religious and political movement was founded in this time by the Paiute Nation (in the region of present-day Nevada) prophet Wovoka. Wovoka had a vision that the Christian messiah Jesus Christ would return to Earth as First Nations man, and believed that if every First Nations person were to practice the Ghost Dance, all of the white settlers would leave First Nations land and the reincarnated Christ would restore these territories to splendor. Wovoka's vision included the promise that traditional resources like the Bison would be restored and the spirits of dead ancestors would be risen from the grave to teach the living.
The Ghost Dance movement gained a following, and the last Ghost Dances were held on the Pine Ridge Reservation in 1890. The U.S. government wanted to suppress the practice of Ghost Dancing and tried to make negotiations with First Nations chiefs to prevent people from practicing the dance. When this failed to play out as the government had hoped, they resorted to coercion by violence. The government intended to surround disarm the Lakota people on the reservation so as to prevent any further uprising. On the 29th of December, during rounds to seize weapons from the Lakota camp, a deaf man named Black Coyote refused to give up his rifle. In the struggle to take Black Coyote's rifle from him, the gun went off and fighting broke out. 
After the initial, accidental gunshot, both United States troopers and Lakota men opened fire. Though women and children tried to take shelter in camp or flee the gunfire, the Lakota camp was surrounded and the United States soldiers fired directly into the camp. In the span of less than an hour, hundreds of First Nations people were killed, with estimates ranging between 150 and 300. Survivors were forced to move to the reservation. On the side of the United States, 25 men were killed and several more were injured during the fight. 
It is important to put these numbers into perspective by understanding the percentage of people who were killed or injured during the Massacre. Of the perhaps 350 Lakota who were camped at Wounded Knee, even the most conservative estimate of 150 deaths indicates that nearly half the group was killed. In contrast, of the 500 soldiers and troopers sent by the U.S. government, only 25 (or 5%) died. The Lakota people were outnumbered, surrounded, and indiscriminately killed. 
The Wounded Knee Massacre is historically significant not only for the intensity of violence which occurred there, but also as an archetypal event for the long legacy of the colonization of the Americas and the eradication of First Nations people and culture. The Wounded Knee Massacre was initially called the Wounded Knee Battle, but this was a gross misnomer. A battle implies two (or more) groups of an equal mind to engage in combat-- the Massacre at Wounded Knee was an attack committed by the United States government against the Lakota People. 
The conflict did not end in 1890. In 1973, around 200 members of the American Indian Movement staged a protest at Wounded Knee. The activists were there to protest the corrupt tribal president Richard Wilson and the United States government's failure to negotiate and uphold treaties with the First Nations. Again, the Lakota people were surrounded by U.S. law enforcement and though there was only a total of two deaths, the occupation lasted 71 days. During this time, electricity, water, and food were cut off from Wounded Knee in an attempt to starve out the protesters. The U.S. law enforcement officials repeatedly opened fire on the Lakota people and both of the two people who died during the Incident were First Nations protesters.
I encourage you to read up on the current Dakota Access Pipeline protest to learn more about the continuing legacy of the oppression of First Nations people in the United States.
http://plainshumanities.unl.edu/encyclopedia/doc/egp.war.056

https://woundedkneemuseum.org/

https://www.britannica.com/place/Wounded-Knee