Depends on what sort of chameleon you have. Some mountain species dig very shallow nests and can use the wide pot of a plant you are already using in the enclosure.
Others like veileds prefer to dig very deep nests. I like to use a 5 gallon bucket with a cage made of rubber coated hardware cloth on top of the bucket (just wrap the wire around the bucket, zip tie it, and you have a tube cage that fits snugly on the bucket. Put a screen aquarium cover on top of it and there you go). Or I've used smaller storage tubs (2.5 gallon) in the terraria, but the bucket I think is better for the female psychologically. They will dig all the way to the bottom of a full 5 gallon bucket. For big chameleons, I sometimes use a garbage can filled partway with dirt. Actually this is nice for veileds as well- you can fill 60 percent with soil and have room left over for branches and the solid walls provide privacy.
When I first began breeding chameleons and other lizards, I always mixed sand and peat moss, and carefully dampened it so they could dig tunnels. After several years I switched to dirt from the yard, and was so happy with it that I have just done that ever since- grab a shovel and dig some yard dirt up. At least in my part of the country it is always the right dampness for the eggs and for tunneling (unless it is raining or just rained). Maybe it is different if you live in the desert.
If you have a manicured lawn and use pesticides and fertilizers, it may be a bad idea. If not, you are like me and I find the lizards respond much better to the smell (probably, maybe the look and feel) of the natural soil. And the weeds are good lizard food- dandylion, clover, plantain, etc are all good lizard food and grow free on my lawn during the summer. Manicured lawns are pretty to look at but a lot of work and bad for the environment- they create a biodiversity desert wasteland where only a single species of plant (the lawn) and very few animals can survive.
I also sprinkle dry leaves over some of the surface to give the lizards cover and some prefer to dig in under something else- like a plant pot or a flat rock or piece of wood or bark or dry roots and such. Some will use a hole that you have already started by taking a few fingers and scooping a few inches deep at an angle so they have a roof to the hole and slopes downward.