The phrase Paper Towns is used in three different ways in three different parts of the novel.
In "The Strings" Margo and Q use the phrase to refer to Orlando, and Margo calls it a "paper town" bacuase it's fimlsy and planned- from above, Orlando looks very much like a cirty that someone built out of origami or something. But what Margo is really doing by using this phrase is giving Q a clue.
In "The Grass", Q discovers a new meaning for "paper towns". He learns that they can refer to subdivisions that were started and then abandoned - subdivisions that exist on paper but not (entirely) in real life.
In the final part "The Vessel", Q learns a third meaning of "paper towns", this weird cartographic phenomena wherein mapmakers will insert fake places onto their maps to make sure no one is copying their maps. It is through this that he enventually finds Agloe, a town that was fake but then made real by virtue of having been put on a map, and in doing so, he finds Margo.
The different definitions of "Paper Towns" for each section of the book, each represent a different way of his imagining Margo. In the first part, he's viewing Margo very one-dimensionally. She's paper-thin to him; she is nothing but the object of his affection. In the second part, he's seeing a girl who's half there and half not, so he's thinking about her with more complexity but still not really thinking of her as a human being. Then in the final part of the novel, his complex imagining reconnects him to her.
This book shows many things, but the most important one is that you can never know what's going on inside a person's mind unless they want you to. It is a complex thing to do, but with trust, anything is possible.
