Quote Originally Posted by Ninja_Prawn View Post
Avalon? Camelot? It's a little on-the-nose, don't you think?
That's part of the point. Tar Valon, in the Third Age, left memories that became legend. Legend fades to myth as Ages come and pass, and by the time the "real world" comes around (the First Age, out of seven in the cycle) the myths are well and truly faded and generally believed to be nearly pure fiction.

Same idea with many of the other names and references. In Wheel of Time, those names aren't distorted references to old myths, they are the true historical origin of those myths and it's the mythical versions of the names that are distorted references.