Well, Clem and Tess knew that they only had to give Vito a fraction of what Fannucci wanted, and that he would take care of their problems with Fanucci. This was kept confidential among Vito, Clem and Tess (supposedly).

When Fanucci turned up dead, there were Vito Clem and Tess, with Vito having established himself as top dog among the three. Vito also suddenly had a wad of cash, a new rug in his living room, and was running the clothing etc. that Fanucci claimed was his. Also the neighborhood knew well it was rid of Fanucci. Certainly his death was public knowledge, and the cops themselved probably reported to the papers that Fanucci had been shot several times at close range.

I think it is very significant that suddenly Fanucci was out of the lives of the Abbandando family. As we know Genco ended up being Vito's consigliere, and it is not hard to imagine that Genco and his father (with whom Vito was close) were relieved to see Fanucci gone and Vito prospering. It probably was no leap of faith for the Abbandond0 family to credit Vito with getting rid of Fanucci, and it would be like Vito to neither confirm nor deny this to people coming up to him to give him credit. Also, Vito filled a vacuum left by Fanucci. Instead of terrorizing Italians he built a network of friends by doing them favors and then getting favors back in return. It is telling that the fruit vendor would not take his money, and it is even more telling that as the olive oil business was growing, Vito told that landlord who had refused to let the widow back into his apartment, to ask around the neighborhood about him. He did, and the result was he came back to Vito's office completely terrorized.

Given all this, the legend of Vito among his paisan probably outran the truth. I am certain the word was Vito got rid of Fanucci and took over. Moreover he was always a protector of the Italian neighborhoods ...even through his old age when he made the drug deal that it would not be sold in the old neighborhoods....soething even Michael tried to enforce against Joey Zasa generations later.

Then again, maybe Manolo spread the word.