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As described in the Lore, Kyhlo was a fortress in Ascalon, home of Ascalon's Chosen, the guild of King Adelbern and Mordakai, Devona's father. Nowadays it is unknown which of the many ruins in Ascalon mark the former location of Kyhlo.
During early beta (E3 2004 demo), Kyhlo was the in-game name of Ascalon City, but it was changed, according to Gaile, because Anet wanted to avoid real-world references in game, and Kyhlo sounded like Cairo in some languages.