It's fun to speculate that Val-de-ri has something to do with a valley, but there are two problems with that.

In German, V is pronounced like F in English. If you search on YouTube, you can hear a delightful recording by the Obernkirchen Children's Choir where you can clearly hear the F sound.

The German for valley is Tal. So if the Happy Wanderer wanted to evoke valleys, he would have sung 'Tal-de-ri, tal-de-ra.'

I agree with Joe. It's merely a nonsense refrain, but a particularly charming one.

This is a great little song for fretted dulcimer.