All cultures are to be treated with equal respect. This is a modern educational tendency brought about by anthropology and political correctness, and in modern TV land, by and large, even when dealing with completely fictional culture, this is a rule that's pretty well adhered to.
The one big exception to this is Cloudcuckooland. This is a place with some really strange customs and traditions. While a Fish out of Water or an unforgiving viewer might just instantly assume that mental illness must be involved when they land in an unfamiliar location and everyone just acts strange for no reason, all doubts are laid aside once the reality of this location sets in. In Cloudcuckooland, everyone acts like a culturally out of it nutjob, even when they're talking to each other about completely mundane things. When in Cloudcuckooland, survival in the cultural environment relies on one strict observance—as far as everybody here is concerned, you're the one who's really crazy!
Or, to be simple, this is the place where the Cloudcuckoolander lives. It's the only place in fiction where being a Cloudcuckoolander is happenstance—in these environments, the characters you remember are going to be the normal ones.
The unusual trope name is a translation of "Nephelokokkygia" from Aristophanes' play The Birds, making it Older Than Feudalism. However, Aristophanes' Cloudcuckooland was not actually an "odd place", but a paradisiac state where everything is perfect — and which, therefore, doesn't exist. Accordingly, a "Cloudcuckoolander" was someone demented or naive enough to believe in such an impossible place.
Compare Hufflepuff House, where most of a story's "wacky" characters that are neither cool nor "Draco in Leather Pants" enough to become Ensemble Darkhorses are usually lumped together and given a place to play.
You would think that the world of 300x in Bobobo Bo Bo Bobo was this, until you saw Bobobo World, which takes place inside the main character's head and is even more ridiculous.
Penguin Village in Dr. Slump is a definite example. But any setting with characters like Arale is going to be on a different field of sense.
In the alternate dimension into which Yuuri is swept in Kyo Kara Maoh, there are some bizarre traditions. For example, dropping a spork is a signal of intent to fight someone, an Armor-Piercing Slap on the left cheek is a legit marriage proposal, and there are some unusual greetings.
In a Justice Society of America issue, Brainwave put each society member in bizarre mental worlds where they were convinced they were, in no particular order, a thermometer, a sponge, a fatal disease, a solar system and a laughing stock. Johnny Thunder, the Cloudcuckoolander of the team, thought the world of people that had object-shaped heads according to their profession to make a lot of sense.
Shipping And Handling has Inanima, a fairytale land populated by living objects, and is entirely the figment of Pinkie Pie's imagination. This does not prevent her from bringing other ponies in there (she hired Ditzy and Watt to help rescue a distressed damsel once, and trapped Screwball there since it is a separate reality) and routinely brings her coltfriend Watt over for amazing imaginary adventures, to the point that his imagination has started to affect the place. To an uninformed outsider, though, it pretty much looks like them playing make-believe with a bunch of objects.
Ballymoran in Zonad. The Irish name of the town is Baile Amadáin which translates as 'Idiot Town'.
Kazakhstan in Borat is treated this way. It didn't work so well, despite trying to take Refuge in Audacity. Of course the real joke wasn't picking on Kazakhstan, it was that no matter how ridiculously backwards and offensive he got lots of supposedly normal people would go along with it...
In Jewish folklore, there's Chelm, the town of fools. As tradition has it: "It is said that after God made the world, he filled it with people. He sent off an angel with two sacks, one full of wisdom and one full of foolishness. The second sack was of course much heavier. So after a time it started to drag. Soon it got caught on a mountaintop and so all the foolishness spilled out and fell into Chelm." Chelm was a very popular setting for some of Shalom Aleichem and Isaac Bashevis Singer's parables, to say nothing of old Yiddish jokes that were in circulation.
Finnish folklore also has a town of fools, called Hölmölä (lit. Fooltown or Foolville). Swedish and Norwegian folklore also have a similar place.
German folklore has Schilda, and its citizens, the Schildbürger (around 1600). The story goes that the people of Schilda were so smart, that they were highly in demand around the world as kings and advisers, leading to a depopulation of the town. To counteract this, the citizens started to play so dumb as to interpret every metaphor literally. This ruse was so successful that their stupidity became as legendary as their intelligence. Examples include trying to plant salt on their fields, marking a spot on a boat to remember a sunken treasure, and finally burning the whole city to get rid of a cat.
The planet Mars, where Michael Valentine Smith is raised by Martians in Robert A. Heinlein's Stranger in a Strange Land. Early in the book, Smith acts like a Cloudcuckoolander because Martian customs and philosophy are very different from Earth's.
The Neverending Story briefly shows the City Of Old Emperors, set up for would-be rulers of Fantasia, who invariably lose their minds once they sit on the throne. They are then driven into the city, where they wander around aimlessly, repeating pointless tasks under the supervision of a monkey.
The island of Zenkali in Gerald Durrell's The Mockery Bird. In his memoirs, Corfu as well.
Gulliver's Travels consists of the narrator travelling to a series of these, mostly intended as satire on stupid real-world customs, political issues and wars. At least until he gets to the land of the talking horses, which is basically perfect.
Especially Laputa, the third Cloudcuckooland, which is a literal flying city.
In the Larry Niven/Jerry Pournelle short story "Spirals", an orbital-station-turned-interplanetary-ship is referred to by its inhabitants as "Cloud Cuckooland". It then turns into a real example when the air recycling system starts outputting alcohol instead of oxygen. An orgy almost ensues.
The Xanth series is basically set in Cloud Cuckoo Land, but even they have regions crazier than normal - the Region of Madness, comic strips and to a certain extent Ida's moons.
Hundred Acre Woods in Winnie The Pooh, simply because pretty much all the inhabitants are highly eccentric. Tigger and Owl especially, even though Pooh has his own moments. But then, they are living toys. Even Christopher Robin applies some odd child's logic; just read the explanation at the beginning for what the reasoning behind the name Winnie-the-Pooh is.
In Golden Girls, Rose's hometown of St. Olaf, Minnesota, fits the bill nicely. All of a sudden, Rose's strange habits are a result of her upbringing.
A small example of this place's insanity: Once, the small Minnesota town's most active volcano (!) threatened to erupt. Rose, as the town's dumbest virgin, volunteered to be the sacrifice, in the directions of a bunch of Druid priests in town for the opening of Stone Hedge Land. As it turns out, they were just Shriners looking for a good time.
On Cheers, Woody Boyd's hometown of Hanover, Indiana was occasionally depicted as one of these.
The Festrunk Brothers, the "Two Wild and Crazy Guys" played by Steve Martin and Dan Aykroyd on Saturday Night Live, are ostensibly from Czechoslovakia. Their descriptions of their hometown and its customs, however, are from Cloudcuckooland.
In many ways, the town of Cicely in Northern Exposure qualifies as a suburb/colony of Cloudcuckooland.
Arguably, Melonville from SCTV can be seen as this.
All That included a recurring sketch about Funny Foreigner Ishboo, who was a foreign exchange student from some unspecified country always referred to only as "My foreign land" that could only have been Cloudcuckooland.
In The Adventures of Pete & Pete, Wellsville is definitely a cloud cuckooland. In a World where superheroes (who can skip rocks on Neptune) run around in blue and red striped tights, metal plates and tattoos get main character status, and everything (and we mean EVERYTHING) is Serious Business, Wellsville is just plain weird.
The eponymous town of Twin Peaks would definitely qualify.
As would the FBI in the same series, if Dale Cooper, Gordon Cole and minor characters such as Denise Bryson and Chet Desmond are any indication.
New Zealand from Flight of the Conchords, especially considering how the characters from New Zealand (especially the Prime Minister) act quite odd strange.
Dibley from The Vicar of Dibley definitely counts, given how nearly everyone acts like a loon, and the place itself is often shown to be far from normal.
The "old country" from which Latka Gravas hails in Taxi.
And now Paradise in Bunheads. Amy Sherman Palladino is quite fond of this trope.
Gunther and Tinka's home country in Shake It Up. Lampshaded when Ce Ce and Rocky meet their family and realize that Gunther and Tinka are normal by comparison.
The town "Eureka" from Eureka. Every person in town is a genius, usually a Bunny-Ears Lawyer, and the top of their profession. For example, the town Sheriff is a US Marshal, the local dog-catcher is one of the world's top animal trackers, the chef at the local cafe is one of the world's top chefs, and so on. It doesn't help that most of the residents have little or no contact or interest in the outside world.
Dog River, Saskatchewan, is this sort of place in Corner Gas. The few people who could qualify for Only Sane Man awards don't really seem to mind.
Greendale College from Community, a place where mass pillow or paintball fights bring the campus to a stand-still, monkeys and ex-teachers live in the vents, the Glee Club controls minds, there are magical hidden trampolines, zombie out-breaks and a flag with a butt for a logo. Oh, and the whole thing is controlled by a shady, creepy air-conditioning repair annex which has eyes everywhere.
Douglas AdamsThe Hitchhiker's Guide to the Galaxy reveals that the entire universe is like this, more or less. The Hitchhiker's Guide to the Galaxy, which hasn't been released on Earth due to unfortunate circumstances, also has the words "Don't Panic" written in large, friendly letters on the backside of its cover. The reasoning behind these words is as follows: If you are about to die, then consider how lucky you are that life has been good to you so far. Alternatively, if life hasn't been good to you so far, which given your current circumstances seems more likely, then consider how lucky you are that it won't be troubling you much longer.
One of the bad signs in the later books is when things start becoming saner; this is accompanied by the Hitch Hiker's Guide being moved away from the hitchhiker market.
Wonko the Sane believes this about the rest of Earth, which is why he built an inside-out Asylum for it. His self-assured perspective that everyone outside is crazy and inside is sane parallels Arthur's perspective about the rest of the Galaxy aside from Earth. Yet throughout "So Long and Thanks For All the Fish", in England and California the same craziness is demonstrated and Lampshaded by the natives; just like the rest of the Galaxy.
In GURPS Fantasy, Sahud as originally written had this going on, which was unfortunate, as it was also the designated Oriental parallel. The explanation given as a justification was that it was founded by a random mix of Chinese, Korean and Japanese peasants transported from Earth by the Banestorm. The involuntary settlers attempted to rebuild their social system from their confused memories of what the upper classes looked like from afar, resulting in a land that came across as Gilbert and Sullivan's The Mikado as written by Monty Python.
In EarthBound, Saturn Valley. An RPG town where all the NPCs are cephalothoraxes with massive noses and eyebrows, have a thick accent represented by an extremely strange font, and are quite fond of interjecting with an enthusiastic "boing"? Lucky for the player that there's an audio clue for the one that actually says something important.
Banjo-Tooie has a stage called Cloudcuckooland. Despite this, while the stage design is rather weird and random (some believe that it's a dumping ground for all the leftover ideas the devs had after making all the other levels) the NPCs found there aren't noticeably much stranger than the rest of the insane cast.
Tri-Ace loves this trope in their optional dungeons. Lots of Fourth Wall breaking abounds, from the developers readily acknowledging Retirony on an early character in Valkyrie Profile: Covenant of the Plume, to the announcements from nowhere informing the characters that they're entering Bonus Dungeon territory (and from time to time, characters even noting that "[That enemy] was a lot tougher than in the main story!"), to absolute unbridled madness (such as kobold versions of main characters in Valkyrie Profile 2 Silmeria, and the constant barrage of unending craziness from mostly everyone in Covenant, ranging from old characters discussing their advanced age in a JRPG, most of the female cast mercilessly mocking the main character and mistakenly getting the impression that he's done Squick-worthy things with a pair of underaged characters with their mother present in the conversation, Hrist challenging the party just because she's pissed over the fact that she hasn't gotten her own game yet, Freya challenging the party because the party's resident Jerkass mage told her that she's extremely beautiful yet wouldn't even consider getting into a relationship with her because of her undeniably advanced age despite her being a goddess and immortal, the resident Creepy Twins getting their own Fourth Wall Mail Slot where they read letters from the programmers and harrass The Hero for butting in and and Gabriel and Ethereal Queen lamenting over the fact that Seraphic Gate is starting to show its age and slowly falling apart while trying to get their next role in a reality show starring Silmeria to enemies getting progressively weirder names, from tall armored warriors getting names like Unit 00, vampires that are literally called Accepting Blood Donors and No Ketchup, Please, bug enemies getting names like George and Ringo, wolf enemies being called Dire (unfitting animal name here) and Gabriel himself getting an everchanging title on each playthrough, including Posessed, Obsessed, Depressed, Underdressed, Headdressed and Distressed and Wylfred's father getting increasingly stranger meanings for "father". When all the above is juxtapositioned with the main quest's extreme seriousness and and over-the-top Olde English, it's even funnier.)
Psychonauts. Even the "real world" has some fairly... interesting features occasionally. The Lungfish, the Asylum, psychic animals... then you go inside someone's mind. Interesting fact: almost every character in the game has severe psychological issues.
Katamari Damacy and the rest of the series have crazy scenarios. Wrestling Ring stairs! Fish watching TV! Race Karts that jump over arches! Arguably, the entire game is one long Cloud Cuckoo Land.
In some Sonic the Hedgehog continuities, the Special Zone (aka the Warps of Confusion) is a mixture of this and Hyperspace Is a Scary Place. Notably it's based on the very trippy special stages in the first Sonic game (the background consists of birds morphing into fish in an Escher-like manner as discordant twinkly music plays, etc.)
The entirety of Kingdom Of Loathing, which is populated by stick figures who live to spoof the everloving hell out of MMORPG tropes and features monsters such as orc frat boys, animated wads of poutine, and misspelled undead (or possibly undaed) such as the skleleton and the zmobie.
While the Kaka Clan of BlazBlue are themselves strange, the... place that Cloudcuckoolander Taokaka's Astral takes place in is... even stranger. White, fluffy clouds, giant fish flying through the sky, randomly appearing Chibikaka... you just have to question whether this is supposed to be some place for real, or you've been trapped in the kitten's dream world or something.
Sharence from Rune Factory 3 is this, moreso than other Rune Factory game towns. The characters have their own, bizarre quirks. Despite most characters being weird beyond belief, some of the weirdest characters are your love interests.
To an extent, the various Netherworlds in the Disgaea series. Demons sure are weird...
Improbable Island actually justifies this; the premise of the game is that a device known as the Improbability Drive is generating chaotic energy, causing all sorts of weirdness to ensue. As a result... well, the entire place and all its inhabits can get quite surreal most of the time.
Touhou has Gensokyo, basically a nature preserve for all the weird and wonderful things the rest of the world doesn't want anymore, and it very much shows. Most notably, when a pair of goddesses decided to move to Gensokyo and bring their human priestess with them, said priestess spent the next few games going completely mad, to the point where "You can't let yourself be held back by common sense!" is almost her Battle Cry.
The Ace Attorney world, especially outside the courtroom. There're only few people who's sensible enough, and if they are sensible, they'll snark.
Aperture Laboratories of Portal and its sequel show a rather dark version of this. The original use of the portal-gun was for bath-curtains. They created a bouncing gel which was originally meant to be a dieting substance, but was pulled off the shelves, for, uh, unreleased reasons. Their on-and-off-switches for ventilation fans are powered by giant lasers. Their experiments may contain trace amounts of tumours, hallucinations, mantis men, time-travel, death, and cake. They created GLaDOS to rule it, and thatwent well....
The series doesn't have a lot of characters, but almost everyone we meet is a Cloudcuckoolander. We've got GLaDOS, the facility's omnipotent AI who's got a few screws loose, and cares only about science and bratty mocking. There's Wheatley, the slightly dense but sweet British robot who was designed to make GLaDOS stupid, and goes evil when hooked into her body. Ratman was a scientist whose paranoid schizophrenia saved him, since it turned out that he was at the mercy of an evil robot, and with his love for the Companion Cube writes helpful and creepy messages on the walls. There's the testing robots, Atlas and P-Body, who are both overly playful, eccentric and oddly human. The founder of the facility, Cave Johnson, was egotistical and stubborn, and a little bit hazy on the morals. Caroline, his secretary seemed sensible, except she got turned into GLaDOS. Really, the only one at all "normal" is Chell, and she doesn't speak because of pathological stubbornness!
"Pyroland" from Team Fortress 2, as best exemplified in the Meet The Pyro trailer, where the Pyro mistakes his committing wanton acts of violence and destruction against rival mercs as fun and joy in a pastel-colored world of lollipops and bubbles with cherubs. Players can also enter Pyroland with certain items such as the Pyrovision Goggles, which make the game world garish and colorful, other players talk in high-pitched voices, replaces screams of pain with laughter, and replaces gore with balloons and confetti.
Gogo the Dodo from Tiny Toon Adventures is based on a character explicitly made from this setting. Possibly explains why the dodo died out.
Similarly, in the Tex Avery cartoon The Cat Who Hated People, the moon is portrayed in a very similar way as Wacky Land.
Rolf's "old country" in Ed Edd N Eddy seems to be this, judging from the odd customs glimpsed from time to time.
Catscratch has the world inside the secret door. Naturally, it's ruled by local Cloudcuckoolander Waffle.
Canada from South Park. The Canadians quite often break into song, have flapping heads and beady eyes, and most aspects of their culture seem to revolve around fart jokes. This isn't to mention Canada itself seems to be a version of Oz. And even Canada has its own Cloudcuckoo Land: French Canada!
Twilight Sparkle sees Ponyville as this in the pilot episode. She gets better.
Cloudcuckoolander Discord turns Ponyville into this in "The Return of Harmony".
Yakestonia from Doug. The traditional greeting is "Zwooba, Zwooba, Zwooba!" while making fart noises under your armpits. And Halloween follows Easter traditions...and Christmas follows Halloween traditions.
It's both subverted and played straight at the same time: Japanese society is actually extremely conservative, shunning everyone and everything that dares to stray from the norm. Bashing Cloudcuckoolanders is Serious Business. For example: Being into Cosplay during your high school years can cost you any chance of ever going to college. Acting or looking strangely in public will likely cost you your job. And don't you ever show too much emotion in public! Of course, this applies only if Moral Guardians find out it's you. Anonymous Cloudcuckoolanders can't be bashed. And unusual trends that manage to stay around against all odds will eventually "earn" acceptance, and from then on be treated as if they were perfectly normal and things have been this way all the time. Karaoke is a good example. And keep in mind that all of this is unwritten law, but expect everyone to follow it.
Any room utilized as a dressing room for a theatrical production while it's being used for that purpose. It's pretty much a fact that anyone who is involved in acting and skilled at it is at least a little bit crazy, so what else would you expect when you set up these rooms where multiple actors will be crowded together in various states of undress?
Germany has this reputation as well. In fact in the early 2000s the radio call-in show Loveline had a Germany or Florida game where a caller would tell a weird story that had been in the news and the hosts would guess if it happened in Germany or Florida.
Hollywood, CA gets this reputation. With almost as many characters off-screen as on-screen, it may deserve its nickname: Hollyweird.