In Fairy Tail, there are names like Lucy and Wendy mixed with Japanese names like Nastu and Kagura. I was wondering if there was a specific reason for this, or if they just wanted that way for no reason. I've been questioning about this for a while.
Like Hiro Mashima said in his interview with ThoughCo.,
"Q: Are the Fairy Tail characters based on people in real life? Is there a character in Fairy Tail that is most like you?
Hiro Mashima: Definitely Natsu. He's like me in junior high! (laughs) All the other characters are based on my friends, my editors, people I know through work."
So based off of this text, a valid guess or answer could be that the names were based on people he knew. Lucy is a plausible common name for people and as an author of a popular manga before Fairy Tail, Rave Masters, he most likely would've known some people with these names or similar names. For example, there was a Japanese Musician named Masakazu Natsuda. (Pure guesswork here) So Natsu could've very well come from there.
So in conclusion and answering OP's question, the names that were given to the characters were extremely diverse like you said, some Western names, some Japanese names, and even a Russian name! Based on that interview (Little evidence here, please don't blast me), I believe that the names could've come from the people and connections Hiro Mashima had in real life.
By and large almost all the names in Fairy Tail are Western names or at least meant to sound Western. The setting of Fairy Tail is a pretty generic western fantasy world at its base, so most characters have names appropriate for such a world. While there are a few obviously Japanese sounding names, I don't think there's much reason for them beyond their characters usually being obvious Japanese or Far-East stereotypes.
There doesn't seem to be much information on how the author of Fairy Tail names his characters. However, in an interview in 2008 he explained why he named Natsu after the Japanese word for summer:
For my Japanese audience, I thought western fantasy names would be unfamiliar. [...] Natsu means "summer," so he's a fiery guy.
However familiarity doesn't seem to have been a concern when he named other characters, or when he gave Nastu a family name, Dragneel or his nickname "Salamander".