Given the last two years have had heavy (and cold) rain and strong sunshine in the same day - which gave rise to the claim that Edinburgh was the only place you could get trenchfoot and sunstroke in the same day - the advice about clothing isn't as silly as it sounds. At the very least expect rain.
As for what to see, the reviews in the Scotsman are a good place to start but there are several freesheets that appear on a daily basis in various odd places, plus most venues will have reviews posted outside. Don't forget the half-price hut which will be somewhere on Princes Street - the last two years it's been by the Balmoral and by the National Galleries.
Virtually nowhere - except perhaps the Meadows at 2:00am - is especially unsafe if you take the usual precautions
And yes, it's as packed and as hectic as it's claimed