So I was reading an article about how people were speculating on there the last city is located and they were suggesting Chili! Like seriously!?! Isn't the whole point of us going to the cosmodrome because the walls that you see are the walls outside of the city? And that the rest of the planet had been overrun by fallen that the only place we can go to is the city and the cosmodrome which is right outside the walls. Cuz you can clearly see the walls when your in the tower and they seem the be the same looking walls as when your at the cosmodrome. So correct me if I'm wrong.
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It takes place in old russia, it's mentioned several times over.
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OLD RUSSIA it's in Russia, geez is it that fûcking hard?
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I'm not sure where the city is but you can tell in the picture below that it's in the northern hemisphere because of the earths curve in relation to the sun. http://images1.wikia.nocookie.net/__cb20130217232861/destinypedia/images/thumb/e/ee/The_traveller.png/500px-The_traveller.png
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It's on Earth, the precise location, is unknown. Ghost said something about not being able to break orbit, but being able to make it back to the city. We do know it's in a mountainous region.