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I think it's primarily Midwestern, though they do draw from pretty much everywhere.
It's the "Waterpark Capital of the World" because of the volume of waterparks, the history (the whole waterpark "thing" sprung here, and the major waterpark firms are located in the area; if you have a local waterpark, chances are the Dells were somehow involved), and due to persistent marketing.
Sandusky is more well known, and growing up in Iowa I had at least heard of "The Dells", but I think the pull and knowledge is much more regional than some sort of nationwide recognition. The Dells area is great for camping and is very beautiful.
I definitely think it is regional. Most people I know in the Midwest are familiar or have been there at one point in time. I remember once visiting Dallas, Texas and no one had any idea where I was talking about.
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