It also helps correctly answering her questions. It is wooded areas as well. After completing her questions throughout the fights, that sideline quest will set you up for her joining the party. This is completed when you see her in the last location.

Spoiler:
You'll see what I mean after hitting Wu Tei following Junon. You'll have to find transportation there. The meeting is on the island.
"Nar har har har har!" ~Yuffie, Crisis Core- FFVII