So I have never herd the term “Eraserhood” and I have never seen the movie “Eraserhead.” So I’m guessing the name comes from the fact that Lynch once lived there, his “hood” and he made the movie eraserhead, so “Eraserhood” then came from that?

All correct assumptions. I got the name from the Philebrety blog.

http://www.philebrity.com/2009/09/08/and-now-lets-give-the-eraserhood-some/