There is lots to do in Lijiang.  Here are some of the best suggestions:

stop by the temples during the day (Wenfeng Si, Zhiyun Si, Bai Ta):   These temples are real ones, with no entrance fee.  They are located in scenic locations:  Wenfeng Si is on Wenbi Feng mountain just south of town, and the view of Lijiang valley is stunning.  There is a lovely spring and pond behind the temple and a mystical cave just up the hill on a well marked path.  About 1,000 meters above the temple is a brand new pagoda for meditation. The hike up the hill is fully worth the views. The Vajra Master there, Jinpa Lama is very garrulous and loves questions about Tibetan Buddhism (bring a translator if you don't speak Chinese or Ganzi Tibetan).  Zhiyun Si is the seat of Trungpa Rinpoche, the head of the Karma Kagyu lineage in China and a very important tulku.  The other senior lamas at this temple, located behind Lashi Hai lake, are very friendly and will offer you yak butter tea and a seat by the stove.  At both of these temples, there is a large collection of books in Chinese to give away.  The Vajra Master at Zhi Yun Si is Gongsang Wangdun and a lot of people come to take refuge vows with him.  The most friendly lama of all is Gele Lama at Bai Ta, the great white stupa on the road to the airport.  He's a wonderful person to talk to about Buddhism, meditation practice, Tibetan culture in general.  Achim Lama at the white stupa is also very friendly but his Chinese language ability is more limited.

visit one or two of the shows:  the three best are (1) the Zhang Yimou extravaganza out by Jade Dragon Mountain.  Show time is around noon (the time changes from time to time so check before you go).  You get there by number 7 bus which leaves from the junction of Fu Hui Lu and Minzu Lu.  The ticket is pricey but the show is world class.  It's a song and dance about the life on the Tea and Horse Caravan Trail.   It clearly conveys the feel of those days.  (2) The next best is free!  It's the song and dance show at Highland Gale, located just above the waterwheel in the Old Town, near the parking lot, on the second floor.  The show starts at 9:30 pm every night.  The door is tiny and unprepossessing, and the weathered sign above the door hard to see.  It seems that the Old Town Management Committee likes it that way.  They keep confiscating all of the easy to read signs.  This is an all Tibetan show and you are only charged for what you eat or drink.  Surely the best deal in town, and certainly the best Tibetan performance. (3)  The third best is the nightly show at the Dongba Palace, starting at 8:30 pm.  This show features Naxi and Han music and dance, with very little talk, unlike the more famous Naxi Traditional Music across the street, officiated by the very witty Xuan Ke.  Xuan Ke is wonderful if you speak Chinese but boring if you don't.

the villages:  If you've missed a wander through at least one of the villages around the city, you've missed out on the best part of Lijiang.  The villages are the real thing, whereas the town is done over for tourists.  The closest villages to check out are Bai Sha, Lashi, and the area just to the west of the New City (you can walk west from the end of Fu Hui Lu, through the wet market and out into the countryside.  Get off the number 1 or number 9 bus right after the turn at the end of Fu Hui Lu.  If you want to explore farther afield, try a two day trip out to Shitoucheng.