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Wallachia, also found written Valachia or Valahia, in reality, is a region of Europe south of Transylvania and north of Bulgaria. Now part of Romania, Wallachia was in the Middle Ages an independent principality. One of its rulers, Vlad III Drăculea, lent his surname to Bram Stoker's fictional vampire.
The term Wallachia in Castlevania is oftentimes not only used as the proper region - just "outside" of central Europe behind the Carpathian Mountains - but also as a fictional term for the realm of Dracula, or the region of Transylvania. In contemporary German, the "Wallachei" still is in use as a term for behind the horizon - analog to its historical counterpart where people would neither speak Latin nor German; the end of the medieval world.
The Japanese rōmaji for Wallachia, Warakiya, is used as the name of the Belmonts' hometown. The fictional town of Warakiya is generally said to be in Transylvania. Also, the opening prologue of Curse of Darkness states that the battle of 1476 (shown in Castlevania III) took place in Valachia (a variation on Wallachia).