Some villagers might be in shock and disbelief. Naruto has always been a part of the village, and suddenly being sealed away would be hard to accept. They might start to question the Hokage's decision.
The older generations who remember the power of the Nine - Tails might be relieved at first. But as time passes, they might start to feel guilty. They see Naruto as a hero who has protected the village many times, and sealing him away might seem like a betrayal in the long run. Also, the village's economy and morale could take a hit. Naruto was a source of hope for many, and with him gone, the village might seem less vibrant.
The villagers' reaction would be a mix of excitement and some concerns. On one hand, Naruto's popularity among the younger ninjas is huge. His friends like Sakura and Shikamaru would be his biggest supporters and help him in his new role. However, some of the more traditional clans might worry that Naruto's unorthodox ways could disrupt the long - established order in the village. But over time, as Naruto shows his ability to balance his unique style with the responsibilities of the Hokage, they'd come around.
One possible reason could be a misjudgment by the Hokage. Maybe they believe Naruto's power is too dangerous and uncontrollable at a certain point, so they decide to seal him away to protect the village. For example, if Naruto's Nine - Tails' power starts to go berserk and they see no other way to stop it without harming him too much.
There would be a group of people who understand his decision. They might have seen how much Naruto has sacrificed and how tired he must be. They would support him in his choice to step down and hope he can finally have some peace in his life. For instance, his close friends like Shikamaru might be among those who support his decision.
The villagers who once shunned Naruto might start to realize his importance. They would see how much they took his presence for granted. His absence could make them reflect on their past behavior towards him. Some might even join the search parties out of guilt or new - found respect.
However, there could be a group in Kiri who are more open - minded. They might be curious about Naruto and his abilities. They could welcome him and even offer to train with him, sharing their unique water - based jutsu knowledge in exchange for his knowledge of Konoha's techniques.
He might be extremely disappointed and angry. Naruto has always dreamed of becoming Hokage, so this ban would be a huge blow to him. He could lash out at those he believes are responsible.
His friends would likely be in shock. Sasuke, for example, might initially be angry at himself for not being able to prevent this. He would then start planning ways to break the seal and get Naruto back. Sakura would be heartbroken. She might use her medical skills and knowledge of chakra to try to find a way to communicate with Naruto or at least sense his condition in the moon. Shikamaru, being the strategist, would start gathering information about the seal and who or what caused it.
Well, it changes the power dynamic. With Naruto sealed away, the villages that once relied on his strength would be in a more vulnerable position. His friends and allies would also have to find new ways to protect their homes. It might lead to new alliances forming as different groups try to fill the power vacuum left by Naruto.
Sakura would be very worried. She has always cared about Naruto, even if she sometimes gets annoyed with his antics. She would probably try to find him right away, thinking that he's in some kind of trouble.
Under Naruto as the 5th Hokage in fanfiction, the village would experience a cultural shift. Since Naruto values all kinds of people, the village would be more open to different ideas and ways of life. New forms of ninja techniques might be developed as he encourages everyone to explore their potential. Also, the village's defenses would be strengthened not just by physical means but also by the strong bonds between the villagers, which Naruto would foster.