In Buffy, most people who see supernatural things forget about them shortly thereafter. However, there is a fair number of people who do remember. What is the key to remembering/forgetting in Buffy?
Do they actually forget? Or do they just not talk about it?
At the prom in Season 3, when Jonathan gives Buffy her Class Protector award, he says something like 'a lot of strange stuff happens here, and most of the time we don't talk about it'
I think the majority of the Sunnydale populace adopt an 'out of mind, out of sight' attitude, that they just don't acknowledge the supernatural happenings.
I seem to recall Giles making a comment at the end of the Harvest (1.02) that people will rationalize what they can and ignore the rest. The only people who don't seem to do this are blatantly aware of the supernatural -- usually because they see something supernatural and are given the correct explanation before they've had time to come up with another one in their mind.
I seem to remember that this is called the “Sunnydale effect”, but the best reference I could find is from some fanfiction:
We used to call it the ‘Sunnydale effect’ - people were so unprepared to deal with the realities of the situation that they ignored the evidence around them.
I remember something along those lines being said in the show too.
This isn't as far-fetched as it sounds.
Like a cult, if all the people around you accept a given reality or truth, you are much more likely to accept it as well, particularly if you want to believe that reality. If everyone else who was at "The Prom" (or whatever event is in question) tends to repeatedly deny whatever trauma transpired there, you are likely to actually modify your memory of the event over time.
Those who did remember were those who were around groups who discussed and acknowledged the events or individuals who were particularly strong-willed. You would also be immune to the shared unreality/denial if you were otherwise "in the know"--for instance if you were practicing witchcraft yourself, you might be less likely to believe that the werewolf attack you just saw was really just a bunch of large dogs.