I seldom use silly names as "official names" found on a map. Because, in reality that seldom happens. However, the silly names abound in local culture - which is where we find silly names in reality.
As far as town names, I don't know why but I prefer the names of my larger cities to be made-up names (which is really no different than names from a foreign language such as San Jose, Los Angelos, and Philadelphia for us Americans). But the suburbs and the surrounding towns/villages usually all have practical names because they get there names from local famous people or local industry. As a DM, it gives me a mental cue as to what the smaller places are famous for.
You can read more about my homebrew in my sig. There is a link to and ENWorld thread. As a few examples to see if I pass the test:
Big Cities: Hippossus, Theropa, Mistrolla
Suburbs/surrounding villages: Deep Creek, Hemlock, Elk Lick, Peachtree