I find it a little odd that when we first meet young Vito in The Godfather - Part 2, why he seems to know so little about Don Fanucci. He asks "if he's Italian why does he steal from his own people?" Or something along those lines. You'd think he'd be aware of that kind of thing by that age.
This scene, which does not exist in the base novel, is a movie expository construction to introduce us, the audience, to Vito learning the ways of the crime world and the difference between a "crime boss" who takes from everyone and one who protects his community.
Vito's whole ethos is to give people their "innocent" pleasures which are forbidden to them by the government. He will provide gambling and other such pursuits but refuses to be involved with less "innocent" endeavours like drugs and prostitution.
VITO (Sicilian) Why? Why does he bother other Italians? GENCO (Sicilian) Because he knows them; he knows they have no one to protect them.
In the novel, Fanucci is introduced in a single paragraph and is well known to Vito
In the neighborhood lived a man called Fanucci. He was a heavy-set, fierce-looking Italian who wore expensive light-colored suits and a cream-colored fedora. This man was reputed to be of the “Black Hand,” an offshoot of the Mafia which extorted money from families and storekeepers by threat of physical violence. However, since most of the inhabitants of the neighborhood were violent themselves, Fanucci’s threats of bodily harm were effective only with elderly couples without male children to defend them. Some of the storekeepers paid him trifling sums as a matter of convenience. However, Fanucci was also a scavenger on fellow criminals, people who illegally sold Italian lottery or ran gambling games in their homes. The Abbandando grocery gave him a small tribute, this despite the protests of young Genco, who told his father he would settle the Fanucci hash. His father forbade him. Vito Corleone observed all this without feeling in any way involved.
The Godfather - Mario Puzo