The Arabian Nights
is a collection of Middle-Eastern folk tales that exists in our world
. References occur to it in some of Diana Wynne Jones's works.
In Castle in the Air, the Sultanates of Rashpuht resemble the setting of The Arabian Nights in the same way that Ingary resembles the setting of Western European folk tales.
In The Lives of Christopher Chant, the worlds of Series Ten also resemble the setting of The Arabian Nights to some extent; Christopher considers giving the Living Asheth a copy (it exists as a book in his world, too), but concludes that she'll find them too Realistic to be entertaining.