Its actually very easy to explain. Silverpine (in my theory anyways) was Knothole Glade from Fable 1, due to all the Balverines and Wolves and whatnot. Bower Lake is still there, but was changed to Millfields, the Driftwood people are descendants of the Gypsies who raised you in Fable 2 which is proven because there is a caravan once you've helped them out called "Sparrow's Shack". Brightwall is just a new town I guess, and your Father (Fable 2 Hero) founded the Academy. Its been what, 100 years? Surely new things pop up. Mourningwood was just a place where the Eco-warriors (god I hate them) settled for the nature, and the fort was built to keep the Hollow Men in the cemeteries at bay.
Bowerstone is still Bowerstone, with the Industrial section added of course. If you don't remember, Bloodstone was destroyed, most likely by the King (once again, your father). Mistpeak and the Dweller Camp are two new places we never got to go too in the other Fable games (the mountains). So I think its a pretty darn good trade off if you ask me.
Also, as said before, you can still see old locations from Fable 2 such as the Spire and Brightwood Tower. Granted you can't get to them, BUT THEY ARE STILL THERE.
Who knows, maybe some future DLC will open up the old areas, we never know?
P.S. I completely disagree with all you whining haters. This is by far the best Fable yet, its more free and open, more awesome choices to make, a better way to upgrade your character (in my opinion, its also cool to see your progress on the statues in the Road to Rule), the way the weapons change is awesome. It ticks me off about some of the glitches (like not being able to have multiple children, please fix it LH!!!).
I'll keep buying the games, and its still one of my favorite franchises. I can't wait for the next step in the game timeline.