Like Gideon Zhi said, Ys is indeed mostly based on real places with their names slightly edited. Just to add a few more places to the list above this post:
Eresia - Eurasia
Medo Sea - Mediterranean Sea
Ispani - Spain
They didn't bother changing anything for Europe though. You can see this right in the beginning of Ys Seven:
That red hair...
You must be from Europe.
The only thing left that would make the Ys series more close to reality was if the "Romun Empire" would sack/destroy "Altago" and salt the earth there so no more plants and crops could grow. Instead, if I remember correctly, they signed some sort of ceasefire agreement in this series. This was mentioned somewhere in Ys Seven.https://en.wikipedia.org/wiki/Battle_of_Carthage_(c._149_BC)
Edit: I also forgot to mention that "Canaan Islands" is probably either a reference to the Canaan settlement on the island of Saint Croix (in the United States Virgin Islands) or to the Canary Islands. That would seem to match the whole Spanish and Mediterranean theme in that area of the game (where Europe is supposed to be).