Terezin was built at the end of the 18th century under the reign of Emperor Joseph II of Bohemia. The town itself (the Main Fortress) served as an important garrison town for the Czech in the 19th century, and its Small Fortress was used for political prisoners of the Habsburg monarchy. During the Nazi occupation in the second World War, Terezin was converted to a Ghetto, where deported Jews were detained before being shipped to the more notorious execution camps in the East. The town's Small Fortress became Prague Gestapo Police Prison. Although it was not one of the "extermination camps" per se, large numbers of Jews, homosexuals, and other prisoners of the Nazi regime were decimated during their detainment here.
The town of Terezin was originally built to house 5,655 inhabitants in peacetime and up to 11,000 in wartime. Between 1941 and 1945, 140,000 men, women and children from throughout Europe were deported here. Over 35,000 died of hunger and diseases such as the typhoid fever. 87,000 were deported to extermination camps in the east, virtually all to Auschwitz-Birkenau. 3,800 of these people survived the killings there. As the war ended in Terezin, there were approximately 17,000 survivors. Some 1,600 children were still in Terezin at the end of the war, of whom 93 survived.
The Nazi regime went to great lengths to spread a false notion of Terezin as a self-governing city for the "inferior race" of the Jews. The Red Cross was allowed to visit once, in June 1944. For this visit the Nazis erected fake storefronts and deported many Jews to Auschwitz to reduce the appearance of overcrowding. They went on to produce a propaganda film about the camp which was similarly rigged.
The Small Fortress of Terezin was converted to a prison for enemies of the Nazi regime, many of them leaders of Czech resistance movements. 32,000 prisoners passed through the small fortress between 1940 and 1945, 1,500 of whom were Jews. In all, 2,600 prisoners died here. 250 of those people were executed by firing squad, the rest died due to harsh conditions, disease, and torture. Of the prisoners who did not die here, thousands more died after being deported to the death camps in the East.
Terezin is now inhabited again, but the former prison stands empty as a memorial to the atrocities committed there. I toured and photographed a few scenes from Terezin's Small Fortress during my visit to Prague, and also visited the Terezin Ghetto museum in the Main Fortress. The tour is a profoundly sobering experience, as is the museum (which deserves far more time than the one hour I spent there).
I have tried hard to consolidate dates and figures accurately from web sites and informational pamphlets, but my phrasing of them might not be entirely accurate. If you find errors, please correct me. Wikipedia seems to be outrageously inaccurate on some of its numbers, so I've avoided relying on it.