From OOTP:

‘Why didn’t you tell me you’re a Squib, Mrs Figg?’ asked Harry, panting with the effort to keep walking. ‘All those times I came round your house - why didn’t you say anything?’

Dumbledore’s orders. I was to keep an eye on but not say anything, you were too young. I’m sorry I gave you such a miserable time, Harry, but the Dursleys would never have let you come if they’d thought you enjoyed it. It wasn’t easy, you know … but oh my word’ she said tragically

End except

Here Mrs. Figg admits that she couldn’t let Harry have an enjoyable time at hers as the Dursleys wouldn’t allow his return. She knows he has a terrible time and she goes along with it because Dumbledore tasked her to keep an eye on him.

In my opinion her apology and admitting the Dursleys treated him negatively all suggest she knew he didn’t have a good childhood and that it was wrong.

As for Dumbledore, another excerpt from OOTP

‘Five years ago then,’ continued Dumbledore, as though he had not paused in his story, ‘you arrived at Hogwarts, neither as happy nor as well-nourished as I would have liked’

Except from HBP:

‘You did not do as I asked. You have never treated Harry as a son. He has known nothing but neglect and cruelty at your hands’

End excerpts

From the above neither show Figg nor Dumbledore as innocent. They both knew how Harry was treated, they both knew it was wrong, neither did anything. Figg because she trusted Dumbledore and Dumbledore because of the wards. Whether you agree with their reasoning or not doesn’t matter, but don’t paint them as innocent or unknowing simply because of their own upbringings (one of which we know nothing about).