In my mind it's a real street somewhere in Manhattan (though admittedly cul-de-sacs are rare in Manhattan). In that universe, it's normal for some people to have "screens" following them around. In every TV show that breaks the fourth wall, in that universe it's just a fact of life that a screen follows some people's lives, with an ever-present audience watching.
And regarding letters and numbers, as Bert said in
Muppet Family Christmas, "Where we come from, this is small talk." There have been a few self-aware references over the years that the people on Sesame Street are oddballs. Like that time in '75 or so when Bob and Gordon were playing "One of These Things" with some chairs, and the chair delivery guy thought they were a couple of nutjobs (It was hilarious because he was reacting like any person from the 'real world' would.
)
So a "screen" with an agenda of teaching children, somehow made itself known to the number/letter-oriented residents of that neighborhood about 40 years ago, and that's how it's been ever since. I don't dwell too much on the details.
It's also a nice "echo" of things that Big Bird, while on the Muppet Show, mentioned that that and Kermit live in the same neighborhood. I imagine that Kermit would travel across town to the Muppet Theater and come home to Sesame Street at night (probably after getting lost every single time since the street's location appears to be hard to pin down even to the people who live there.)