On the episode where they blow up Walnut Grove, are they blowing up the actual buildings used on the show or are these just false fronts built for these scenes. The buildings that get blown up look different to me.

They did destroy some of the actual buildings in that ep. I heard it was because Michael Landon didn't want them to be used for anything else.

Michael Landon had a 10-year lease on the property (I believe it was located in California's Simi Valley) used for the series. The terms of the lease stipulated that the land be restored to its original appearance when the lease was complete (i.e. no buildings). So Landon figured that since he had to tear the buildings down anyway, he might as well use the destruction for dramatic purposes.

Yes, i believe you are right about the location being Simi Valley.

Allison Argrim stated in an interview that they blew up the sets so that no one would use them for other things. They thought it might be traumatizing for fans of the show to see the Mercantile used for a horror movie or something like that. I thought that was very interesting and it makes the whole last episode make more sense.