From Wikitokyo², the unofficial Megatokyo wiki
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Tokyo is the capital of Japan and setting for the events in Megatokyo. It is composed of a multitude of districts or special wards (tokubetsu-ku) and is apparently mecca for all manga and anime lovers, as well as gamers and otaku/fanboy types.

After the embarrassing events at E3, Piro decides leaving the U.S. is the only sane thing to do and drags Largo to Tokyo with him. They promptly spend their available money to the point of not having enough for a ticket back home, starting the main events of the comic.

Much of the story takes place in Shinjuku at the MegaGamers store (located near Yoyogi Station). Other major districts in the story include Shibuya, Meguro, Harajuku and Suginami. There is a real Tokyo map here that details many important locations in Megatokyo.

For information on the real life Tokyo, see Wikipedia:Tokyo.