Is James aware?

[Cyrus Hanley]

There's also the "Note to Mr. Fitch" in Homecoming.

[SHF]

You will notice in South Vales that the traffic lights still work, as well as the exit signs in the Apartments and also in Pete's Bowl-r-ama. Silent HIll is not a bustling town, but it still is inhabited.[/quote]
It's a mechanic for atmospheric effect which has absolutely no bearing on the actual plot.

^
If the town was truly abandoned, there would be no power to run the lights.