I have little doubt that you’re right that that is what is meant, jheem, but have you actually ever seen podunk spelled “poe dunk”? It’s a new one on me.
By usually I meant always. You are correct, Dr Techie, I was hedging my waffles. I believe I’ve seen it spelled po’ dunk to bring it into line with one of its folk etymologies.
As a teenager in the 1950s I remember driving through Massachusetts and driving past a sign identifying the watercourse “Podunk Creek.” No apostrophes or spaces in evidence.