Scarborough is, and has been for thousands of years, a good natural harbour on a very dangerous coast.
It also has a relatively easy access from inland compared with other towns on the north east coast, so it is a natural place to become a centre of commerce.
It's easy to see how Scarborough Fair would become very important to people living in North and East Yorkshire. The area was much more commercially important in the past, at various periods of history, for Herrings, Chemicals and Timber. It's a natural attractor for a good song.

I lived in Scarborough for seven years and still know the place well. It is fascinating to realise that there were people there then who remembered, at first hand, that there used to be hiring fairs on St Nicholas Cliff.
In modern times, Scarborough Fair- which is now a funfair of course- marks the end of the tourist season.   

Cheers
Dave