you could have a fairytale themed town, but not like with castles and stuff but instead based off of actual fairy tales. Like the mayor could be little red riding hood and could have her house set up like the grandmother's house would be (like with a big bed and a picnic basket and the like). there could be a goldilocks character who has all of the bear plushes and a small, medium, and large chair and bed and stuff. a character for jack and the beanstalk who's house looks like the giant's castle (using cloud flooring and the virgo harp and ivy wall for example. and the fourth character could be rapunzel who lives in a castle, with the second floor being decorated like an actual bedroom and the rooms on the bottom floors could be gardens and thorn bushes, and the basement could be the witch's lair. or you could make the mayor named the narrator and make their house like a giant library and you could use patterns of each fairy tail and customize stained glass to have each of the patterns on them and hang one in each room of the house. aah sorry i'm rambling but i'm getting so many ideas
and for the villagers you could have wolves and deer and use a lot of mushrooms and lucky clovers and pine trees to make it look like a magical forest outside, with stone paths that lead to each house and around each house you could place pwps that have to do with each story (can't think of any examples sorry).
woah so this was longer than i intended it to be but i hope this helps you out in choosing a theme for your town!