Where It All Goes Down
Hollywood
Hollywood—located in the heart of Los Angeles, California—is a bizarre community. Though it claims to be the place where dreams come true (or is that Disney?), it might actually be the place where dreams come to die.
Hodgepodge City
First, let's take a look at the city itself. Our most enduring image is Tod's description of the strange, gaudy neighborhoods that feature clashing architectural styles: "on the corner of La Huerta Road was a miniature Rhine castle. [...] Next to it was a highly colored shack [...] out of the Arabian Nights" (1.17). This amusing imagery shows that (a) Hollywood is an incredibly artificial place, and (b) its bigwigs have more money than taste.
We see a similar effect at the movie studio. Think back to when Tod chases Faye through a series of movie sets, essentially traveling back in time as he passes through each one. He describes this as "a history of civilization [...] in the form of a dream dump," alluding to how these films have little in common with historical reality (18.12). Once again, West emphasizes the artificiality of Hollywood.
The thing is that everything in Hollywood is on the surface. There's no substance to any of the houses, or the movies, or least of all to any of the relationships people have with each other. The people, just like the houses and the movie sets, are just walking surfaces; they've had to suppress their real selves so much that they may not even have real selves left.
The Dark Side
Homer's home is a miniaturized version of the weird, tasteless Hollywood dynamic. This thing doesn't just differ stylistically from its neighbors—it differs by the room. Doesn't exactly sound like dream home material to us, but different strokes, we guess. Actually, it's not Homer's dream home, either: he only "took it because he was tired and because the agent was a bully" (7.3). The city isn't just artificial; it's also predatory, especially to people as simple-minded as Homer.
Finally, the wild scene outside of Kahn's Persian Palace Theatre unearths the deep well of violence beneath the town. This is supposed to be a movie premiere, but it seems more like a riot—Tod observes the police and notes "how worried they looked and how careful they tried to be" (27.6). All that Hollywood artificiality is barely concealing some of the darkest corners of the human psyche. One wrong move, and it might erupt. And it does.