School districts are the biggest driver all around the country. If you stipulate that Palo Alto is part of a major metro area, and you can choose to work in any of the major metros in the US, you don't pick Palo Alto for the schools, do you?
Palo Alto public schools -do- rank very highly. There are also preschool programs run by the Stanford education college that are well-regarded. Local private schools rank among the best in the nation (as well as being absurdly expensive), and you will find lots of kids that go to school all over the world...their parents can afford it.
I get that you don't like Palo Alto. Its not Oz. But you seem to be casting it as a dumpy suburb that has exploded for no reason.
I'll try to use your comment to refine my argument.
Stipulate that a family of four with two professional working full time is going to move somewhere in the US --- that is, they're not staying in Cleveland because they grew up there.
Then, accounting for regional salary and amenities, school quality and cost of schooling, overall burn rate, and housing costs: why would someone choose of all places Palo Alto?