Learn German: Der Karneval im Süden ist sehr bekannt. - The carnival in the south is very well known.

The word im is a contraction of in dem, which is the dative case. The word in is a two-way preposition. Because the carnival is already located in the south (answering the question "where?" or wo?), we use the dative case. If you were traveling to the south (answering "where to?" or wohin?), you would use the accusative in den Süden.

Since this sentence mentions the south, would people living there actually call it Karneval?

Probably not! In southern Germany, Austria, and Bavaria, the celebration is much more commonly called Fasching. The word Karneval is heavily used in the western and northwestern regions of Germany, most notably for the huge celebrations in cities like Cologne.

Could I use berühmt instead of bekannt in this sentence?

You could, but bekannt is usually more natural for regional events. bekannt translates to "well known" or "familiar." The word berühmt means "famous" and carries a much stronger sense of international renown, glory, or historical significance.

Why is Süden capitalized? Are all compass directions nouns in German?