I might be projecting a bit too much with my "Ash and Serena love festivals" hc but honestly, my art my rules. After all, Pallet Town is one wide green open area that also connects with the sea on the south side, and that's one perfect spot for both summer and winter festivals.

From my perspective, by the time Ash is in his late teen years, nearby cities such as Pewter City and Cerulean City are on the peak of their expansion, so Pallet Town might have grown into a point of interest for holidays and a natural retreat (for health reasons, etc), so it would be only natural that locals might become interested in having their own festivals in there.
Not that they would come up with new festivities, but I can imagine certain celebrations/parades, that to this point only took place in nearby cities, having a local version in Pallet Town.

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