(of a person) at the town or city where one lives; at the town or city being referenced.
He'll be in town next week for business.
Tell everyone I'll be in town for a few days.
They definitely make the best burgers in town.
The phrase in town may be used whether or not the place in question would normally be considered a town, it can also be a city.
Where the place in question depends on the context. When one says they are in town to someone, it means they are in the city or town where the listener is currently living. However, if the listener is asked if they are in town, this is asking if they are currently in the city or town of the person asking.