Aerial footage of Tathra, just east of Bega, on Monday morning showed streets destroyed by fire and some homes still smoking after the blaze tore through the town.
Showing the unpredictable nature of fire, many homes have been reduced to rubble and ash while neighbouring homes appear unscathed.
The NSW Rural Fire Service had issued an emergency warning after the fire, which started in Tarraganda early on Sunday afternoon, crossed the Bega River.
Fanned by strong winds and high temperatures, it burned through seven kilometres of bushland into the township and right to the coast.
The threat was downgraded late on Sunday night after a southerly change helped ease conditions, but a great deal of damage had already been done.
Dan Bennett, who lives in Tathra, said his family had been celebrating his parents' birthdays at their home when crews in fire engines 'screamed' into their street and told them to evacuate.
'All of a sudden [the conditions] just turned, we could see flames a couple of streets away. It just turned on a dime,' Mr Bennett said.
'The smoke was so thick. There were lots of embers flying about.'
His family, who were bunking down for a stressful night at a relative's house in Bega, have since heard the fire swept through their street and most of the town.
'When we were getting in the car to leave, our neighbours across the road could see [the fire] behind our house,' he said.
'We’re all safe, but our biggest concern is the house... It's [my parents'] forever home - they have been there for about 13 years.
'It's going to be a miracle if it's still there.'
Mr Bennett had heard the town's supermarket, public school, bakery, chemist, and bowling club, along with holiday apartments, had been affected, but the extent of damage remained unclear on Sunday night.
Bega Valley mayor Kristy McBain said about 35 properties had been damaged or destroyed, while the town's roads, water system and sewage treatment plant were also damaged.
Tathra Public School, Bega High School, Tanja Public School and Bournda Environmental Education Centre will all be closed on Monday.
Local resident Tas Fitzer left his family home and managed to evacuate to Bega with his mum, cat and dog in the car as thick smoke was “billowing” across the town.
Mr Fitzer said it had been difficult waiting to hear about the extent of devastation to the town.
'Our closest friends we know are all safe, but there’s the acquaintances … that we haven’t been able to get in contact with,' Mr Fitzer said.
“And the disappearance of the town as a whole - we will have friends who have lost their homes, and businesses lost, it’s just going to be devastating.
“The waiting, and not knowing, is the most stressful thing.”
Shane Fitzsimmons, NSW RFS Commisioner, told Channel 7 News that the 'large, fast-running fire' had burnt 'right into the back and all in and around the community of Tathra'.
Mr Fitzsimmons said the number of houses damaged or destroyed could be 'in the dozens', and conditions remained 'very dangerous and volatile' on Sunday evening.
Firefighters from the Rural Fire Service battled the fire amid 'strong and gusty north-westerly winds' and temperatures above 38 degrees, assisted by helicopters and Fire and Rescue NSW.
A large air tanker flew to the area from Victoria to 'make a drop' on the bushfires, Greg Allan, spokesman for NSW RFS said.
Residents north of the Bega River were advised to head in a northerly direction towards Bermagui. People at campgrounds to the north were relocated where it was safe to do so.
About 400 people fled to evacuation centres in Bega and Bermagui, with many being offered beds in the local area.
Bermagui Country Club was offering evacuees free meals, while the local chemist and Woolworths supplied medication and food. Locals were also donating clothing, bedding and toiletries.
The fire was just one of 26 grass and bush fires burning in NSW on Sunday, with 12 burning out of control at 8pm, as temperatures soared above 40 degrees through the day. More than half the state was under a total fire ban on Sunday.
A fire that burnt 300 hectares near Goulburn was downgraded on Sunday night to an 'advice level' as conditions eased.
Meanwhile, in Victoria, homes were destroyed as firefighters battling fierce winds worked to contain a cluster of fires burning out of control in the state's south west.