Silent Hill is a fictional, self-sufficient town located near the fictional "Toluca Lake". The town's history dates back to the early 1600s, the area that the town was later founded on was home to an unnamed Native American tribe. As European settlers began to occupy the surrounding land, the Native Americans began to die off due to being exposed to the diseases that the Europeans brought with them. The Brookhaven Hospital was later built in order to treat the diseased. Even with the hospital operating, the settlers and natives continued to die off, and eventually the settlers fled the town - leaving it abandoned for nearly 100 years. It wasn't until a penal colony was resettled to Silent Hill, in the early 1800s, that anyone occupied the town. Twenty years later, another epidemic broke out, and by 1840 the town was abandoned again. Ten years later, a group of settlers discovered coal, and Silent Hill became one of the many boomtowns present during the time. The town saw wave after wave of settlers, until the mines were exhausted and the business died.
After the American Civil War, Silent Hill became a resort town. Around that time the town became the base of operations for a religious group, who founded a series of small doomsday cults based upon the eschatology of the Native Americans who populated the area centuries earlier. Collectively referring to themselves as "The Order", the cult began to attract a number of followers. As time went on, the cult grew larger and required more fund in order to operate. The Order began trafficking a psychedelic drug called White Claudia, manufactured from a plant indigenous to the town, as a source of income. When the local authorities caught wind of the operation being carried out by the cult, they confronted The Order. The drug business was crippled, but at cost - several police officers lost their lives in the battle.
As time went on, Silent Hill became a place of phenomenon. Supernatural sightings and encounters, bordered by the town's dark past, turned people away from the town until it eventually became a ghost town.
 The Town of Silent Hill
Silent Hill manifests itself in three different dimensions: a normal, populated town; a seemingly deserted town, enveloped in a supernatural fog; and decaying town, referred to as "The Otherworld", filled with hellish creatures and demonic imagery. In the games, the main protagonists never visit the town when it was populated by people, instead they'll explore the two latter forms that the town takes, fending off all sorts of demons and illusions. People seem to be drawn to Silent Hill, for one reason or another, however in the third, fourth and fifth games, the Otherworld reached out to people in the nearby towns of Ashfield and Shepherd's Glen, to people who otherwise would never have thought of visiting the town.
The differences between the town and it's inhabitants in the games are reflected by the characters' personal fears. The town and demons that a character encounters may be shared amongst other characters and visitors to Silent Hill, or they may be exclusive to only one character.