"The town is being devoured by darkness."
The town of 'Silent Hill' is a randown resort town that lies abandoned in an ever-present fog. It has been implied that Silent Hill was always home to a supernatural presence (Mary claim in Silent Hill 2 was that it "used to be a sacred place."), but the town's bloody history has perverted sparked those energies into something darker with Dahlia's cult.
Commentary published by Konami has stated that the power of Silent Hill has "intensified greatly" since the events of the first game. This seen as protagonists in the later games has their stories unfolded in nearby towns.
"The geography of Silent Hill is situated around the edge of Toluca Lake (where the resort itself lies), with the older sections of town located to the south and along the banks of the adjacent river. Due in part to heavy commercial development, the town is fairly self-sufficient; It has an elementary school, a shopping mall, two separate hospitals (Alchemilla Hospital in Paleville and Brookhaven Hospital in South Vale), and other stores and attractions. "Old Silent Hill" and "Pale Ville" hold sprawling suburban areas, with both apartments and homes, as well as several motels and the grand Lakeview Hotel. The beachfront area of Paleville also has a lighthouse and hosts the Lakeside Amusement Park." - Wikipedia
The true location of Silent Hill is unknown. The original game manual stated that it was somewhere in New England which would explain the mist. The body of water that surrounds on three sides is revealed to be Toluca Lake, which is in California, in the second game . License plates in the first game indicate Michigan, (another place full of resorts and lakes), but the notes of the Japanese version of the Silent Hill 4: The Room soundtrack CD gave an address for Heaven's Night. Heaven's Night is a nightclub visited by the player in Silent Hill 2, that would put it in Maine.
The film adaptation Silent Hill places the fictitious town of Toluca County in West Virginia when Rose Da Silva googles it.
The film's screenwriter Roger Avary used a real town of Centralia, Pennsylvania as an inspiration for the town of Silent Hill. In 1962, a fire in a landfill spread to the coal mines underneath Centralia and has burned since then, which forced most inhabitants to leave forever.