One of the more entertaining facets of Terry Pratchett's writing is his ability to work cultural references into Discworld's fantasy setting. By this I mean he mentions things that either a) are actually happening or b) have actually happened. For example, in the Moist von Lipwig-centered novel "Making Money," he uses a line actually told to him: "hemlines rise during times of national crisis." Which, he says in the acknowledgments, might explain why miniskirts have been consistently popular for so many decades.
I love trying to work cultural references into my fantasy worlds. Moreso with SON OF MAGIC than CALLARION AT NIGHT, because SoM takes place on Earth's "sister world," but CaN does not. My reasoning for including these cultural references is twofold:
1) "Easter eggs" for people who figure it out
2) I think it's funny
Let me give you an example. I plan on renaming the main character of SoM, which isn't all that unusual for me to do, but this time I realized that I had the possibility of something amusing if I did it right. The new name I chose was Fionn Cinnabar (sounds cool doesn't it?), and the amusing bit came because "cinnabar," as some of you might know, is the ancient name for mercury sulfide. The character name thus partially translates to Fionn Mercury.
Get the possible joke yet? No?
Perhaps if I named the character Friedrich Cinnabar instead? Freddie Cinnabar?
Why yes, I am a huge fan of Queen. However did you guess?
The problem, of course, with doing something like this is you run the risk of having it be an author nod to the reader. When done correctly though, including cultural references in a fantasy world divorced from our own is a good way to reward the observant and faithful reader, while proverbially "sticking it to the man" in such a way that you can't get in trouble with it. It's almost allegorical in a sense. Except not nearly as dramatic.
So tell me, my fine blog readers, what works have you read that do cultural references well?