Well, from Misty's gym, she did keep more water pokemon in the gym that she didn't use on her team. We could probably assume all these water pokemon are a mix of hers and her sisters' pokemon, but when her sisters left the gym there's still more than six pokemon remaining with Misty. There's also some gyms shown having pokemon hanging about outside of their pokeballs, but they don't get used for battles. So I think as a gym leader it's not too far-fetched that you have the pokemon lingering about somewhere, instead of storing them away at the prof's place. Especially if you're trying to breed them... as long as they're never used in battle. Just say Arthur's got a farm somewhere near the city where he keeps all these fairies or something like that?