That's a garbage cliche saying. It means people just write about their lives, and most people lead boring lives.
I do agree it's a garbage cliche if people take it too literally—if they take it to mean 'don't write about anything you haven't directly experienced yourself.' However, if it means 'get to know what you're writing about,' I think it has merit. After doing tons of research for my own novel, I have uncovered SO much I didn't know existed before I started. So many fascinating personal stories, and so many events I either didn't know about at all, or had a skewed impression of. I don't think research ever really limits a writer. It increases a writer's scope and enlarges our 'experience.' If it turns out that a piece of research scuppers something you'd intended to write, then it's a lot of fun figuring out how to work around that issue. Find some other thing that could work in that setting instead. Or figure out how to circumvent what you know isn't possible, to make the plot point possible after all. Think of all the fantastic writers who wouldn't have written stories at all, if 'write what you know' had been taken literally! Yikes. We'd have lost a lot. Research plus imagination can create rich worlds lots of readers want to live in—for a while, at least.
This is a tough one. I've placed my story in California and occasionally Canada. I've never been to California and I've only been to very specific places in Canada but I didn't use the ones I know. I actually invented a town with an old disused ski resort. I can't really fudge faking L.A. or Beverly Hills. Writing about California has given me some issues specifically the weather. I wrote a scene with rain twice and had no idea rain is so rare in California. My research is fluky to say the least but I'm thinking of making it work for me by taking on Hollywood clichés to build up the scenes and mocking them. i.e. They turned on the rain machines again. This way I can filter California through a reconstruction of its own myths. Weigh the pros and cons of how the place can improve your story or simply derail it. I once did a blog on here about Debbie Macomber who did an Alaskan romance. I thought she kinda dropped the ball cause she mentioned all the basic things about Alaska, things you'd read in a guidebook, but didn't utilize the cold or isolation as metaphors for her romance. I think so long as you can get things to mesh readers will be less eager to point out mistakes.
I think your choice of fake disused ski resort is excellent. If you used a real ski resort, disused or otherwise, you'll be needing to fit a fictional story into a real place ...a small place that many people will know. I don't think it's really possible to do that, unless you are very vague about the details. And if you're going to be vague about the details, might as well invent the setting, and you can be more specific about the details! Fair enough, if you know LA and merely fake a street or something like that. But it's a lot more difficult to pull that one off in a real small town that you've accurately named. So the smaller the place, the more need there is to fake it ...within realistic boundaries, of course! Although my setting for my novel is 1886 Montana, I faked a town, a river and the name of the mountain range! The setting is not specified, although it's just west of the Great Divide, and has mountains as well as a valley in it. And it's fairly near to the original Northern Pacific RR line. This fakery may amuse people who live in Montana, but at least I won't piss people off who live in a specific small town!
That immediately brought to mind of Pendleton Or. Driving into town on I84 you see the valley covered in haze of wood stoves.
