Dark and Steel arrive, and Pokémon stops being broken.
Gold, Silver, Crystal (and the HeartGold/SoulSilver remakes) · Released 1999
Johto is the region of Pokémon Gold & Silver — the sequel that introduced breeding, shiny Pokémon, held items, day/night cycles, and the two most important type additions in franchise history: Dark and Steel. These were deliberately added to counter the dominant Psychic-type of Gen 1, and their introduction rebalanced the entire type chart. Johto also continued Kanto's map, letting players revisit all 8 Gen 1 gyms after beating the Elite Four.
Johto is based on Japan's Kansai region, specifically Kyoto and Nara. The Ruins of Alph, Bell Tower and Burned Tower reference real Japanese temple architecture and shrine ruins. Lugia and Ho-Oh were the first pair of 'legendary birds in flagship boxart' roles — a formula Game Freak has used in every generation since.
Gold & Silver's Johto map + revisitable Kanto map made Gen 2 the largest Pokémon game ever shipped to this day — the developers had to use a custom data compression routine to fit both regions on a single Game Boy cartridge.