Used, sometimes, by residents of Madison, Wisconsin to describe their fair city. More often, though, it's used by those who only wish that they were residents of Madison. These folks tend to congregate in Madtown on Halloween and New Year's Eve to get shitfaced, vomit on the sidewalk, start fights, get arrested, and generally prove why they're not fit to live in such a town (ie, they couldn't get accepted to the University of Wisconsin).
Hey guys, we're in Madtown! Let's drink some Natty Lite and get some hot college bitches!
Did you just say "hot college bitches?" You're not from Madtown are you?