I found this story hugely amusing, and thought-provoking too.
There’s a lot of context required to make sense of this story. The author, John Holbo, a philosopher whose bloggings I frequently read on the group-blog Crooked Timber, explains much of that context in a supplemental webpage – so I’ll not make any major duplicative effort here.
The minimal context: the story is a parody of (or extension/sequel to) Ursula Le Guin’s story, “The Ones Who Walk Away From Omelas”. Without knowing that story, you will be hard put to begin to make sense of Holbo’s creation. Unfortunately, as he points out too, there is no freely accessible web version of her story – it’s still under copyright and requires purchasing a version of the text (ebook, paper book, audiobook). Anyway, wikipedia has a good summary.
I am tempted to add a town called Omelas to my fictional maps – and it should definitely be accessible by tram. Actually, my geofictions are full of such “easter eggs” (as they’re called in the realm of modern electronic-domain creative works, such as computer games and websites): references to other works of fiction and tributes to other authors’ geofictions.