The reason they close is for safety, because most of the fireworks are shot from behind Toon Town and low level fireworks are shot off of the castle, so they keep people away from those areas to avoid someone getting hurt from a stray or ear damage from the noise. The Monorail closes for the same reason, it comes pretty close to the castle.
So it looks like all of Fantasyland, all of Toon Town, and the Monorail is probably all of it.