In somewhere like Reading, you will probably find most of the students live in certain areas near the university in second year/third year. You'll find where those places are, because other students will tell you and they'll be the places with the most shared houses available.
People will obviously leave campus, to go clubbing, to go shopping and to do activities, university campus' tend to be pretty compact in most cities (or else they have buildings spread across an area of the city). You wouldn't spend three years in an area that's say 500m from end to end. People do hang out on campus a bit, some will eat in the cafes for lunch for example, but if you are close to the city centre, you'll find most people will go there as there's more choice.
They won't be spread all over the city, but they certainly won't confine their lives to campus, and you shouldn't either- it'll make for a pretty boring three years. If you really want an experience where most people stay on the campus the majority of the time, you need a university like Keele, where there is very little to do nearby off campus.