Occasionally, "on" makes sense when talking about features of a geographical area; "My family lives on Long Island" is an example: Long Island is usually preceded by "on" in those sentences (and you can usually tell when someone is not from Long Island when they say "in Long Island"). The reason for this is based on the type of object that the name asserts the area is: an island or a coast is something you're "on", while a village or city is something you're "in". So, most towns in the U.S. are not cases of such phenomenon, therefore "What's in TOWNNAME" would sound correct to people rather than "What's on TOWNNAME".
Though I did just realize/realise this is not a U.S.-exclusive site, my bad. Could be totally different overseas.