Where continents names are translated
Topic on Manual talk:$wgLocaltimezone
I'm still waiting for answers, don't let me wait for several decaces.
There aren't many people watching this page, so the question might simply have been unseen. However, I've asked in IRC (after trying to find the answer myself by looking through code/docs, without success).
Answer: We are using PHP/Ubuntu's list of timezones for the city names (https://secure.php.net/manual/en/timezones.php) per https://phabricator.wikimedia.org/T19797#225739 and https://raw.githubusercontent.com/wikimedia/mediawiki/master/includes/DefaultSettings.php