Equestria

The story of My Little Pony Friendship is Magic takes place in Equestria, a land inhabited by magical talking ponies and other sapient animals. Equestria is co-ruled by Princess Celestia and Princess Luna.

The beginning
In the beginning there were pegasus, unicorn and earth ponies who did not live in harmony. Their hearts were cold as the blizzard that overtook their land. Each group of ponies decided to find a new place to live. But they all arrived at the same new place with the blizzard. And the ponies figured out there was only one way to get rid of the blizzard, to treat eachother warmly. The unicorns used magic to build Canterlot. Once the city was finished, They invited the pegasus and earth ponies to a party. which is now a yearly event called The Grand Galloping Gala.

Discord's rule
Somehow over time. Discord ruled over the ponies and caused chaos and disharmony, and unhappiness for all of the ponies alike. But Princess Celestia and Luna saw the disharmony in Equestria and found the Elements of Harmony, overruling Discord and turning him to stone. Then Celestia and Luna ruled Equestria and raised the sun and the moon.

Nightmare Moon
1000 years ago, Twilight's story book told of two unicorn sisters who ruled Equestria. One raising the sun and one raising the moon, but as time grew the younger sister, Luna, became envious of how ponies were awake in the daytime. But slept through night. One night Luna refused to let Celestia raise the sun. Celestia tried to reason with her. But Luna instead became a wicked mare, Nightmare Moon. Reluctantly Celestia took the Elements of Harmony and trapped Nightmare Moon within the moon for 1000 years.

Ponyville
Ponyville is the main setting of the series. Ponyville was founded by earth ponies, although over time various forms of ponies have made the town their residence.

Canterlot
Canterlot is home to the royal palace of Princess Celestia. It was also the home of Twilight Sparkle prior to her relocation to Ponyville. The name is a reference to Camelot, the home to King Arthur and his "Knights of The Round Table" as well as being a play on the word "canter," which is a three-beat gait possessed by all horses that is faster than a trot but slower than a gallop.

Everfree Forest
The Everfree Forest is located outside of Ponyville. It appears not to be bound by the same laws as the rest of Equestria since plants grow, animals care for themselves, and the weather changes without the help of ponies. It is also home to some strange creatures, including Ursas and parasprites.

Appleloosa
Appleloosa is a Wild West town built by settlers about a year prior to the events of Over a Barrel. It is the home of Applejack's cousin Braeburn. The town is complete with the typical "wild west" buildings, such as a dance location, a saloon, and a sheriff. It was built on Buffalo lands without their permission, which caused territorial disputes. The name comes from the Appaloosa breed of horse.

Cloudsdale
Cloudsdale is a city in the sky where the Best Young Flyer competition takes place and where Equestria's weather is made. Only pegasus ponies live and work there, since non-pegasus ponies cannot stand on clouds. It is also the hometown of both Rainbow Dash and Fluttershy. The name is a reference to the Clydesdale, a breed of draft horses.

Fillydelphia
Fillydelphia is briefly mentioned by Celestia in Swarm of the Century where there is supposedly an infestation much like the Parasprite one that recently happened in Ponyville. The show's creator, Lauren Faust, originally wanted to use the name for the main setting of the show but was asked to change it. The name is a reference to the city of Philadelphia, where some of the Faust's relatives live.

Hoofington
Hoofington is a village mentioned by Trixie as the site of her alleged battle with an ursa. The suffix -ington is derived from old English for "town". The name is quite similar to that of a political news website, The Huffington Post.

Manehattan
Manehattan is a large city where Applejack's aunt and uncle, the Orange couple, reside. Applejack is introduced to the high society of Manehattan in a flashback in The Cutie Mark Chronicles. She soon finds herself homesick, and returns to the farm. The name is a play on Manhattan Island, a section of New York City.

Trottingham
Mentioned in Stare Master, Where Rarity is making 20 gold-lined gowns for ponies there. Seems to be a take on either Nottingham or Tottenham, a city in England and district of London respectively.

Whitetail Wood
A lovely forest near Ponyville. Unlike Everfree Forest, it is completely under pony control. Tree sap is harvested there. It is also the site for the Running of the Leaves, a running event held by the ponies in Ponyville to shake all of the leaves off the trees.

Trivia

 * Lauren Faust wrote in a comment on her deviantArt page that the Everfree Forest is west of Ponyville, Sweet Apple Acres is southwest, and Fluttershy's cottage and meadow are located north of the farm, presumably between Ponyville and the forest. Canterlot is northeast of Ponyville.


 * In a letter to Princess Celestia, Twilight Sparkle refers to Equestria as a country. Technically, a country where the ruler's title is "princess" or "prince" is called a principality. Equestria was a diarchy, ruled by two persons equally, until the events one thousand years before the series, and was a monarchy during Luna's exile.


 * The English word most similar to the placename Equestria is equestrian, "of or relating to horse riding", from the Latin equester, "belonging to a horseman", from equus, "horse", which is also the origin of equine. In this sense, "Equestria" would translate as "land of the horsemen" instead of "land of horses". However, a more accurate toponym such as Equussia or Equinia would not rhyme with "Celestia".