Canterlot is the capital city of Equestria in MLP - FiM and MLP - Shadows and Stars. It is the largest city in the Canterlot and Ponyville region and located on the side of Canterlot Mountain. 

Locations within Canterlot

Canterlot Castle

This is the home of Equestria's ruling Princess Celestia, and it becomes the home of Princess Luna during Arc 4.

Canterlot Library

This library is one of the largest in Equestria, and is home to many original manuscripts, books and records that cannot be found anywhere else in the world.

Canterlot Prison

A large detention facility, usually reserved for medium to high-security (but not maximum security) prisoners.

School for Gifted Unicorns

The famous school founded by Celestia is found in the city centre, near to the castle. Many of Equestria's greatest mages have attended the school, including the famous Twilight Sparkle of the Noble House of Sparkle.

7875508
An interesting thought

7875509
I'm going to update the information in these threads over time, as I think of more relevant things to add. :)

7875510
Good thinking