The town is somewhat to the north, with mild summers and rather cold winters.
Around the town is a lush forest of mixed deciduous and evergreen trees. The town itself was a former lumber camp, but that more or less changed when a sudden influx of elves and some more exotic fairy critters took up habitation in the local woods. A combination of giggling nymphs and dashing green men more or less distracted everyone from the whole lumber business.
It's also why almost everyone in town has some fey blood, as well as why at least a quarter of the population is made up of half-elves.
Animals around the area are those typical for the climate, though some of the more exotic fairy animals wander around a bit. Best to avoid chomping on unicorn.
The main reason for all the fey is that the area is filthy with nature magic. It's everywhere, radiating out into everything.
You can't watch the woods for more than a second without seeing a moving tree or hearing feminine giggling. The sensation of being watched is very strong.
“She'd become a governess. It was one of the few jobs a known lady could do. And she'd taken to it well. She'd sworn that if she did indeed ever find herself dancing on rooftops with chimney sweeps she'd beat herself to death with her own umbrella.”
― Hogfather