I think it's best addressed when Buffy is given that award in season 3, the speech Joyce gives when they're under the spell, I believe in Gingerbread, and what Willow says about her mother at the end of Gingerbread about selective hearing. Then, yeah, Wilkins ordered coverups, and Snyder was involved in them. Basically, I think everybody had: Selective experiencing. They'd rationalize everything that happened to them.   See 8 other replies

it's not moloch. it does look like him though.   See 1 other reply

from wiki(i wish i could remember the episode in which Giles answers this very question as to why people don't move from Sunnydale.):
"Long before humans settled the area, an entrance to the Hellmouth existed at the site of the future town of Sunnydale. In ancient times, a magic scythe was used at the site of the Hellmouth "to kill the last pure demon that walked upon the Earth." After this, the scythe was hidden, and its last guardian remained, waiting in a pagan temple that would somehow remain unnoticed for centuries. Centuries later, Navajo and Chumash peoples lived in this area. One or more groups of monks or friars also settled in this area. As in general California history, these friars can safely be assumed to have been Spanish Franciscans, who arrived in California in the late 18th century. In 1812, there was an earthquake in the Sunnydale region that caused a cave-in in which an entire mission was lost; the very existence of the mission was soon forgotten. Richard Wilkins arrived in California in the late 1800s, looking for gold. He founded Sunnydale (after considering the alternate names "Happydale" and "Sunny Acres") in a demon infested valley after a Navajo Slayer died there in 1899. con't....   See 8 other replies