You can filter by address city. Go to the People section and click the filter icon (looks like a funnel). Then click 'add criteria' and choose 'address city'. You can then enter your town name and click filter. This will find everyone who lives in your town.
You can read more about filtering here - http://nationbuilder.com/how_to_filter
Complete and current information on how to use NationBuilder is available in the documentation section.