I currently live in Switzerland and my family and I (wife and three small kids) are visiting the Algarve in February. We are staying at a resort and there will be plenty to do there for us there, but I was curious about some of the towns in the region during low season.

We like to explore towns but being the low season I am wondering if most towns in the Algarve will be shut down. We will have a vehicle so getting places won't be a problem. We considered checking out Faro, Albufeira, or Lagos. Would any of these towns be good options in February?

No the towns do not shut down though some restaurants might reduce hours, a bit of decoration will be going on but the locals and the local expats will still need feeding etc. Faro is pretty nice leading up to Christmas so I guess the old town will be very normal. Lagos the same, Tavira for example, in the old centre, will still be active.

I've only once stayed in a resort in my case in Spain and it was dead as a doornail in winter, pool emptied, gym locked up etc. So I'd check any comments on Trip Advisor as to real experiences. Also, if there is a heated pool (some have them), it is turned on.

We were in the Algarve for the winter ( January, February).
From personal experience, a small number of restaurants in the tourist areas shut down for the winter, all restaurants and stores that cater to the local population remain open.