That is a fair point, we do know that at least Chad (and by extension probably his family) knows what's going on as he says something about the island living off of garbage to Jay in the novel that takes place after Descendants 1
So there it's probable- or now that I think about it even confirmed by canon stuff that the villain kids told Auradon what the island is really like (I remember seeing an Auradon magazine that had a "Ask a vk" or something where Carlos talks about the island)
I truly wonder if this sparked stronger discussion in Auradon or not because-
Okay bear with me because here's how I see Adam
He's not a ruthless tyrant even though that is an interesting take on his character-
Now neither of these two are good especially for a king but it does bring into question how he managed to pull so much of the shit he's done
Like- in D1 he relents with bringing the daughter of what he describes as "The worst villain in the land" because his son says "please" and gives him puppy eyes (yes I know Belle also said some stuff but still)
And then family day he blames Ben for in his eyes "starting something" and then walks away
Then in D3 he doesn't say much about what he thinks about the island until Mal suggests closing the barrier and bam, he immediately hops on what she says because it seems like the opinion everyone in the room (except Ben) agrees with and then he lets Mal smoothtalk HIS SON into doing something he doesn't want
Why didn't Adam himself talk to Ben about this?
Because he's a coward who doesn't want to "start anything"
We even see that in the finale- the one of two times I actually understand his reaction when he says they can't just bring down the barrier out of nowhere
Now what does it take to convince him to back down?
Ben telling him it's his decision and Belle VERY LIGHTLY raising her hand
With all that I just said I think it went one of two ways after the rest of Auradon found out about the conditions of the island
The people didn't care because they where villains
There WAS an outcry about how unfair the island was and Adam- the spineless man he is just let someone else deal with the protestors and no one in that situation really cared about the island
Ooops this became way longer than I planned uhm-
Just want to clarify that I have no issues with people having their own headcanons about this stuff I just like to talk about what I think and I tend to spiral easily as you can clearly see
Again sorry for the length