Railway modelers are divided when it comes to the decision of how realistic to make their railways.
Some base their layouts on real lines, with every last detail based on it’s real life equivalent, and meticulously copied from photographs.
Others prefer to invent a fictional location and base their line around that. This option gives you more freedom, as you can pretty much add whatever you want to the layout, without regard for historical or locational accuracy.
Personally I prefer to design layouts based on my own ideas. It allows me to decide to run steam only trains one day, and a modern intercity service the next. It also means that if I acquire a piece of scenery, I don’t have to worry about whether or not it fits in with the time period or location of the layout.
The degree to which you plan your fictional location can vary. Some modelers will write pages and pages of back story for their location, and set it in a specific time (an example would be a 1940s village in the North of England).
As with everything, how you plan your layout depends on your personal preference. You can always change your mind, after all!