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I think the most important reason may be that it is one small step into faery. There is always something of faery about every story. Stories take place in a neater, stronger, brighter world than ou...
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#4: Attribution notice removed
Source: https://writers.stackexchange.com/a/24120 License name: CC BY-SA 3.0 License URL: https://creativecommons.org/licenses/by-sa/3.0/
#3: Attribution notice added
Source: https://writers.stackexchange.com/a/24120 License name: CC BY-SA 3.0 License URL: https://creativecommons.org/licenses/by-sa/3.0/
#2: Initial revision
I think the most important reason may be that it is one small step into faery. There is always something of faery about every story. Stories take place in a neater, stronger, brighter world than our own, a world in which coincidences are more likely and more meaningful than in the real world, in which people are more definitely and consistently who they are, in which the weather and the seasons reflect the moods of the inhabitants. It is a world of symbol and a world of consequence. It is more real, more gritty, more permanent, and yet also smaller and more ephemeral than our own. So, stories are not really set in real places, but in the faery equivalent of real places. Some places, like New York or Rome exist more in our minds as their faery equivalents than as their real noisy crowded selves, so you can set a story in faery New York or faery Rome without changing the names. But for other places, and perhaps this is more for the author's sake than the reader's, it is necessary to create the faery equivalent of those places under a new name so that the faery place can have a clearly established character that differs from the real in all the ways that story places differ from real places.