Does 星月夜 mean Starry Night? If I am not wrong, the literal translation should be star moon night, right? How does it translate to Starry Night then? Isn't the `` character useless in that case?

It is a tricky word, but the doesn't stand for the real moon.

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> _(A clear night where stars shine as bright as the moon.)_

Thus the "literal" translation would be "star-moon night" and not "star and moon night".