That seems like the most natural translation to me too. Where do you keep means something like where are these here at your place.
I wrote, "Where are the knives?" which was marked incorrect. But that's how we'd say it in English (we don't tend to use "máte" in this construct the way Czechs do.
Also, I was told the correct answer was, "Where do you've knives?" which is not good English (we don't make a contraction in this case, though I'm not sure why).
Yeah. I agree we should add "are...". The you've is once again a system hiccup. Will report. We do not add these manually and certainly not to places where they are wrong...
Would it sound rude to ask a host "kde jsou nože?" I suspect that máte shifts the question into a polite register. If so, then you'd do the same thing in English by asking "Where do you keep the knives".
A general note: As hard as it may be to accept, the main reason for mishandling apostrophies and contracted forms is not the foreign volunteers but rather the U.S. company dedicated to language teaching. We can report until we are blue in the face, but I fear this all goes to a coding problem that no one dares to try fixing, so nothing will happen.
ETA: I am personally against Where are THE knives? because now we don't even know who's (j/k) those knives are. Would you not say WHERE ARE YOUR KNIVES rather than the THE version? (On second thought, THE may work as proposed in a homegoods store, while I saw this as a question from a house guest.)