Taken teh right way, write what you know is the most valuable piece of advice ever given to any writer. Slush piles are full of people who write about places and people they don't know, and it's always obvious. Every new writer seems to think a mystery has to be set in New York City, or Los Angelas, or New Orleans, or Paris, even if they've never been within a thousand miles of the actual place. This works, with enough research, with enough of the right kind of research, but it's darned hard to pull off well, or at all.
This doesn't mean you can't set a novel in New York, or on Mars, but it does mean you'll still have to people that story with people you know, adjust the story and setting so that it's really about your home town or city, or a place where you have spent a lot of time. And, of course, there is no such thing as a vampire, a werewolf, or a troll, so you know as much about them as anyone. But you still have to make each beast a real person behind the fangs, beneath the fur, or under the bridge. You do this by writing about people you know. Monster stories are never about monsters, and alien stories are never about aliens, they're both about real people.
The reason most new writers don't write what they know is because they think what they know, the people they grew up around, the city or town or village they grew up in, isn't exoteric enough to write about. To them, New York or Hong Kong is esoteric and exciting.
Really, jsut what is it about Dallas, Texas that makes you believe it isn't a fantastic setting for a story? People who don't live there try to write about it all the time, and generally do a lousy job. People who have lived there, or who have spent a lot of time there, have used it as a setting for some wonderful fiction.
Research is a good thing, but no amount of research can fool someone who has lived wherever you're writing about. You can't fool a New Yorker about his hometown, anymore than a New Yorker could fool you about yours.