Yes, they do.
However, from the angle of the Fort Wilderness beach, you are able to see just how far behind the castle the big fireworks really are to get the effect that they're exploding behind or just above the castle (perspective distortion). If you're turned towards MK, the big fireworks will be exploding pretty far to your right while the castle fireworks go off on the left. It looks like at least a mile of distance between the two.