WWI in Belgium is a bit of a side interest of mine, so I have done some reading on this issue.

First of all, let it be noted that while one million Belgians did initially cross the border into the neutral Netherlands, only about 135,000 stayed until the end of the war, of which 35,000 were Belgian soldiers who had fled the German army and had to be interned (basically imprisoned) according to the terms of international law (German soldiers in the Netherlands were similarly interned). So only 100,000 civilian Belgian refugees remained in the Netherlands for the full four years of the war. Most refugees returned rather quickly after the frontline had stalled in the Westhoek where it would remain until the end. The Germans were particularly anxious to have the Belgians return and put a lot of pressure on the Netherlands to spread the message that all was quiet and safe in occupied Belgium. By spring of 1915 only the above mentioned 100,000 refugees were left.

Though officially neutral, the Dutch were naturally more inclined to take the part of the Belgians for obvious reasons of their shared language and history. Initially, as the horrors of the German invasion were widely reported by Dutch journalists who were able to travel freely in war-torn Belgium as representatives of a neutral power (see for instance the articles by L. Mokveld reproduced on this site), the Belgians were warmly welcomed amid an outpouring of sympathy and compassion. During the first few months of the war, the hundreds of thousands of refugees that kept pouring in were housed anywhere and everywhere, in schools, barns, public buildings, etc. as well as welcomed into the private homes of Dutch citizens. Food and clothes were donated on a massive scale. Many private aid committees were started and maintained throughout the war, even such dubiously neutral ones as this "Committee for aid to serving and wounded Belgian soldiers". The Dutch government pledged to provide a basic monetary allowance to all Belgian refugees.

After the initial influx had subsided and most refugees had returned home, the Dutch government found itself with 100,000 Belgians on its hands. The (reasonably) well-to-do were able to provide for their own housing and maintenace, the middle classes who struggled to do so were given state benefits to supplement their meagre savings or income, but about 20,000 had not much more than the clothes on their backs. These were housed in four large refugee camps in Uden, Ede, Nunspeet and Gouda (as well as a number of smaller ones). The larger camps such as Uden and Nunspeet were built as "villages" with sleeping barracks, dining halls, nurseries and schools, churches, post offices, etc. Nevertheless, they were surrounded by barbed wire and guarded, and the movements of the refugees, who were all employed within the camps, were extremely circumscribed.

The main reason for housing the poorest refugees in this manner was to be able to care for them more economically (i.e. cheaply) and efficiently as well as to keep them from competing for jobs with the Dutch labouring classes, as unemployment was rather rife in this period. There had been resentment among the Dutch unemployed that the daily allowances refugees received were actually higher than their own unemployment benefits.