The most common and most likely answer to this crossword clue is the 8 letter word BURGHERS
I've seen this crossword clue in The Daily Telegraph
B
U
R
G
H
E
R
S
Buddy explains!

The straight part
We know that "townsfolk" is the straight/definition part of the clue. The straight part is often a synonym or definition, in this case townsfolk = burghers.The cryptic/wordplay part
In cryptic crossword there's often an wordplay/cryptic part as well.This part involves a more complex hint, such as an anagram, homophone, hidden word, etc.
Sadly, We don't have an explanation for this specific crossword clue yet.
What does BURGHERS mean?
BURGHERS noun- A citizen of a borough or town, especially one belonging to the middle class.
- A prosperous member of the community; a middle class citizen (may connote complacency).