Where the Olympics were held in twenty-one (3)
I believe the answer is:
rio
'where the olympics were' is the definition.
(Olympic host city)
'held in twenty-one' is the wordplay.
'held in' indicates putting letters inside.
'twenty' becomes 'ro' (I can't justify this - if you can you should give a lot more credence to this answer).
'one' becomes 'i' (Roman numeral).
'ro' placed around 'i' is 'RIO'.
(Other definitions for rio that I've seen before include "Erstwhile home of Biggs" , "Brazilian city and port" , "A Mexican river, may be grande" , "Spanish word for river" , "- Ferdinand, footballer" .)