"Be a small fish in a sea, or a big one in a pond" I graduated (BSc and MSc) from the top university in my country and I'm currently a PhD candidate on another strong university. I expect to defend my thesis in a few months. After that, I plan to stay in academia pursuing a tenure track, and at both mentioned universities I can get a decent position (I've managed to include a number of my undergrad professors in my grad studies or at least collaborate with them at some point, mostly because of my supervisor). However, my hometown is also an university town, and I could certainly apply for a position there, but the uni there lacks the prestige and esteem of the former two.
Through my qualifications, I'm confident that I would advance faster through the academic ranks, contribute to the society in my hometown and introduce some changes to the faculty there. Another obvious big advantage is that I would be residing at my hometown.
On the other hand, the staff and research are much better in the former ones.

My supervisor suggests that it would probably be better for me to be at home, since I think about it in the first place, given that, by keeping and broadening my connections I would experience no significant penalty, at the same time the local academic society would benefit through my ideas.

So should I apply for a position in my home town, where I would be a big fish in a pond, or should I apply at the other universities, where I might be more like a small fish in the sea?
Apply for, and fully investigate, all such possibilities. But I would go even farther: 3 places is not nearly enough to apply to, especially if you are interested primarily in tenured track positions. 

Deciding which job you want to take before you've actually been offered one is perfectly natural, and is a perfectly terrible practice! It so often leads to disappointment, missed opportunities, and general dissatisfaction. 

Now would be the time to expand your horizons! Find new institutions you might like and apply to them; put the word out about your availability through advisors, fellow researchers, friends of friends in academia, etc. 

The chance of getting any one position is terribly unflattering, regardless of your background or standing. If you can find a dozen places that you'd be happy to go to work - relative preferences for one over the other not withstanding - then your chance of getting something you want improves remarkably. Don't put yourself in the position of being disappointed because you had to "settle for your last choice", instead of "winning one of your top 3 picks" just because you didn't look into more possibilities. (This is advice I have to give myself over, and over, and over again.)