One thing that's important to realize is, Owen and his family lived on a farm that was way out in the desert, probably few hours' ride from the nearest town or Anchorhead by hovercraft, so he wouldn't have heard very much news of what was going on in the greater galaxy, save for the times he went into town to sell water, had travelers visit once in a long while, or talk to the Jawa traders. Even then, civilians such as him were not always privy to what the Republic army was doing during the Clone wars, and he would have heard even less from the Empire's doings.
Based on what we saw in Episode II, he knew Shmi Skywalker as his stepmother. He was a teenager at the time, and already had Beru as a girlfriend. He knew about his stepmom being kidnapped, and he knew he had a stepbrother named Anakin who had gone off to become a Jedi. He also got to meet Anakin and Padmé in person when they came to the Lars homestead to find Shmi. However, most of the talking was done between Cliegg and Anakin. He mostly just witnessed what was going on from the background.
I think Anakin and Padmé did tell the Lars family that Anakin had attempted to rescue his mom, and that she died at the hands of the Sand People; but Padmé probably had Anakin omit the part where he slaughtered the whole tribe in revenge. That wouldn't have gone over well with their hosts.
Owen would have certainly heard about the Clone Wars, and snippets about the Jedi fighting the Separatists. Chances were, he figured out that Anakin was one of the Jedi warriors spearheading that effort. However, I doubt he ever knew Anakin's ultimate fate of becoming Vader. Now he knew that Luke was the son of Anakin Skywalker, and he was more than happy to raise the baby with Beru as his "nephew" (though he was technically his "step-nephew"), but again, I doubt he was told what happened in the Clone Wars or on Mustafar. It was already too painful for Obi-Wan at the time, and the less people who knew, the better.
In Episode III, we don't hear hardly any dialogue in the scene where Obi-Wan brings baby Luke to the homestead, though he probably just told the Lars family that the child's dad had died in the war, his mom had died in childbirth (not really naming who she was, though I have a feeling they knew it was Padmé) and the kid needed a family to raise him. Owen had every reason not to want Luke to one day grow up and get involved with anything relating to the greater galaxy, simply because it was what led to his dad's "death," so he probably made up that whole story on his own to make Luke's dad sound less interesting and fantastical than he truly was.
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