I don't know about SV, but I live in the northwest suburbs of Chicago and have a significantly higher cost of living than most of northern Illinois. For instance my parents live an hour southwest of Chicago and have a 50% larger house for 75% of the cost.
But I am not just paying the extra money to be closer to higher paying jobs. I get better schools, better restaurants, better entertainment options, and of course better career options. I also live next to more affluent neighbors, which means my daughter will have more affluent friends, have better internship opportunities, etc. That makes a big difference. My high school techie friends from the same small farm town my parents still live in mostly have jobs as satellite dish repair men or something similar. My wife's high school techie friends from the northwest suburbs build robots for Microsoft Research or other similar jobs. Part of my high cost of living is paying so my daughter has the same head start in the "who you know" category that my wife did.
When you look at "self-made" millionaires and other outstanding success stories, you will almost always notice they came from highly affluent upper middle class families in areas that would give them more opportunities than your average person. The creators of the next Microsoft, Facebook, etc. are mostly likely already born in a place like New York City, Seattle, San Francisco, Chicago, Denver, etc, not the rural Midwest. And in a similar fashion, the next generation of C-level executives, big shot lawyers, etc. are probably also going to be mostly from these high COL areas.
Paying for that high COL in part helps increase the chance that your next generation has a chance of sitting at that table. And even if my children are not that ambitious, at least I enjoyed better food options and a better theater scene for my money.