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I'm not a historian specializing in the Holocaust, but i am doing a study on this period right now. To answer your question it really depends on which towns you were looking at. Most cities were totally clueless of what was happening in the town. The concentration camps were well hidden. This is especially true because even two years after the liberation, the allies were still finding concetration camps. I do believe that some towns might have had a little more knowledge about what was going on, but for the most part the average citizen was totally oblivious to what was going on.

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One cannot say that anything was the 'fault' of someone, or of a group. Clearly the people in towns and villages were not able to affect what happened in the camps. But there was a difference between which type of camp, for example the most common were labour camps, people from here would have been sent from one of the main camps and have already been processed, the local population would see little difference from the labour camps where gentiles were employed. The towns and villages close to extermination camps however knew perfectly well what was happening, from the smell, the smoke, the ash falling from the sky and from the merchandise that the guards would sell in town, stolen from the camps.

A question that should be asked before thinking badly of these people is; if they objected to what was happening, then what could they do and in how much danger would the put themselves, their families and their friends if they voiced any objection.

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Q: How much were the towns next to the concentration camps'fault in the holocaust?
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