Yes, but from the description, Ny'alotha seems like a city that never fell to the Titans, if it even is on Azeroth.
But to be honest, we just don't know enough about it, it might be any of these:
- It's indeed N'zoths prison
- Hidden Black Empire stronghold on the other side of Azeroth
- Not even on Azeroth.
- Located somewhere in the dream/nightmare.
- And here is the craziest ides: The city might be a living, moving old god/void creation.
Nyarlathotep is a living being after all, and is also the son of
Azathoth. Now if they took more than just names from Lovecraftian lore then it could lead to some amazing events.
If more people payed attention to the Lovecraft connections in WoW we would have a lot crazier speculations.