Here's an amusing description of the phenomenon, which one still encounters in many places; this is Robert Paul Wolff describing University of Chicago's Philosophy Department in the early 1960s:

All six of us junior members of the department felt the same irritation at [Richard] McKeon's oppressive influence. We wanted to bring the department into the new era of analytic philosophy, and our older colleagues, thoroughly under McKeon's sway, clung to his antiquated notions of an Aristotelian organization of the academic disciplines, with all the dead weight that went with it. Our situation was made even more frustrating by the fact that our students revered McKeon as, in their eyes, the most important figure in American philosophy. We protested that McKeon was a nobody, an old-timer whom no one in the real world of philosophy paid any attention to. They just thought we were rebellious young men, and though they loved us for it, they didn't believe us for a minute. For two years, we labored in our classes and personal conversations to convince them that when you got more than twenty miles away from Hyde Park [something that certain senior professors had in fact never yet done], McKeon was a nonentity. We were beginning to make some headway when disaster struck. The American Philosophical Association conferred upon McKeon its highest honor — an invitation to deliver something called The Paul Carus Lectures. "There," our students said, "you see?" We gave up, defeated.

As the years passed, and I began to give talks at colleges around the country, I found that my Chicago experience was by no means unique. There are a great number of philosophical enclaves in America in which some local hero figures prominently, even though he [almost always he, by the way] never quite makes it big on the national stage. Each of these philosophers, if I may cannibalize a famous line from Mel Brooks' wonderful remake, To Be Or Not To Be, is world famous in Poland.

I remember my astonishment upon arriving at UT Austin in the mid-1990s, and finding so many students working with Ed Allaire, whose charismatic presence often seduced them into dissertation work under his supervision.  Some of these students were very gifted, but they invariably faced difficulty on the job market because they didn't realize his local stature bore no relationship to his professional reputation outside Austin.