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Is it possible to do Multiple database connection where the main database is attached to SQL Server instance eg: (local) and another database is located in ASP.NET App_Data or it just a silly idea?

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Technically speaking, that's possible. Note that, by using a database in App_Data, there is a great chance that you will have to struggle with security-related errors when running your app on IIS in production environment.

If it's a silly idea or not, depends on the intended usage of that app. IMHO, if it's a demo site to be run on a laptop during a meeting, why not. There is already a discussion on this matter here.

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