The Real World
The real world is -- completely unsurprisingly -- the world from which the seven Chosen Children originate, exiting outside of the context of the computer systems that create the Digital World.
Really, this shouldn't be news to any readers.
Capital City is a city of about 400,000 people, located an undefined somewhere near the west coast of the United States. It is entirely landlocked, about a half-day's drive from any notable body of water outside of moderate lakes. The downtown of the city is marked by a large plaza, in the center of which lying a tremendous fountain.