Oz is the nickname for the Oswald State Correctional Facility, formerly Oswald State Penitentiary, a maximum-security prison (level 4) at Delaware, USA; as shown in the the show. Many of the plot arcs are set in "Emerald City" ("Em City"), an experimental unit of the prison in which the unit manager attempts to emphasize rehabilitation and learning responsibility during incarceration. Emerald City is an extremely controlled environment where there are a controlled number of members of each racial and social group. The show was taped in Bayonne, New Jersey.

Source: Wikipedia.org