Chaos is the opposite of Order: disorder and Pan-deamonium. As defined by the Oxford Dictionary, it is "complete disorder and confusion." Originally, the word meant a gaping void or chasm; this usage is revived in Runemarks.
The realm of absolute chaos is uninhabited, as nothing can exist in it. The laws of physics, being laws, cannot exist in Chaos. Thus, Chaos is without rhyme or reason and proximity to it is a frightening, dreamlike state.