I did some more testing on my own site to check this, without using Toolset at all and simply registering a custom taxonomy using the normal WordPress register_taxonomy function (https://developer.wordpress.org/reference/functions/register_taxonomy/).
When you register a taxonomy using Types it is just providing a UI for that function, so I wouldn't expect the experience to be any different when using a Types registered taxonomy than a taxonomy directly registered with WordPress, but wanted to rule out that Types affects this somehow.
Take a look at the screenshot, where I've been setting up some test taxonomy terms similar to your own.
I was entering new terms on the left, adding the Name but leaving the Slug blank for WordPress to auto-generate.
And you'll see that when it came to adding Lake View in Illinois (after I had already registered Lake View in Florida) it auto-generated a slug lake-view-illinois, i.e. it recognised the clash that would arise from having two terms with the same slug and prevented that.
Note that when I tried again, this time explicitly trying to use the same slug (lake-view), it wouldn't let me, and automatically changed it again to append the top-tier term.
I'm not sure how you managed to create terms with the same slug in the first place because it shouldn't be possible.
The way WordPress rewrite rules work, including the hierarchy is for appearance's sake in any case, only the final slug is used to determine the archive to display. You can see that by trying some garbage URL such as site.com/location/florida/bogus/nosuchplace/pluto/miami/ and it will still display the miami archive.
This is all without Types, it's just how WordPress works.
You could go down the route of crafting your own custom rewrite rules (see https://developer.wordpress.org/reference/functions/add_rewrite_rule/, and try a search for wordpress custom rewrite tutorial), but that's outside the scope of support and independent of whether you use Toolset or not.