After Mexico City we went to Oaxaca City (about 7hrs by bus) Traveling by bus in Mexico is pretty easy and comfortable. It's not very cheap, but you'll be happy to pay for the comforts the buses provide - if you use ADO buses for the night travel choose ADO Gold or ADO Platinum and you'll be sleeping very comfortably. When we took a taxi to Mexico City ADO bus terminal we were anticipating some craziness - something Southeast Asia bus travel is quite famous for: bad organization, hard to find or figure out anything, a lot of hassle and annoyances. However, when we arrived to ADO terminal we were quite shocked - it's amazingly civilized, better than some US bus stations, you even check in your bags same as at an airport. You can buy tickets at ADO ticket offices or Boletotal sales offices (or online: ado.com.mx but then you have to present the print out) When asking for ADO station - use "bus terminal" vs. "station" and pronounce ADO as A-Dee-O - thats when people will understand what you mean.
Oaxaca city or rather town - old rustic feel meets modern artsy scene, Indigenous culture meets hip influence. Oaxaca is famous for the distinct culture of its numerous indigenous communities, its classic and modern artists, its language schools and its traditional drink - mezcal.
We spent 2 weeks in Oaxaca taking Spanish classes 3 hours a day at Amigos del Sol school. This has been a very cool experience since the classes have maximum 3-4 students (we had only 2 of us), the teachers are young and fun and everyone's goal is to start speaking Spanish, so the teachers there have a talent to trick you into speaking Spanish very fast. In addition to the school, we did a homestay living with an Oaxacan family in their house where they had a couple of other students staying as well. So it's fun plus you can have some (with time even intellectual) conversations in Spanish during your breakfasts which our hostess Pati prepared for everyone every morning.
After classes we would generally go to explore the town center which is quite small, but incredibly cute with most buildings being not higher than 2 floors, all painted in different bright colors, and street art being everywhere - from fantasy art to political or social ideas being illustrated on walls. For a small town like Oaxaca it seems it has unusual concentration of artists and generally young hip crowd. The Northwest of Zocalo (town's main square) is the #1 hip area with most of the cafes, galleries, culture hubs, music venues, etc. concentrated around the Garcia Vigil street and close to it. North and West corners of the historical center are very nice to walk around and spot some of the cutest streets in the town. South is a bit cheaper area - thats where you'll find markets, cheap shops and eateries. You'll also find the cantinas aka brothels in the South - so don't be surprised if you walked into a saloon like looking establishment to take a rest and have a beer after walking all day and suddenly you start noticing something wrong with how the women look and act in that place. But don't worry, if you happen to get into this kind of establishment by mistake - it's a rather amusing experience, at least before 8-9pm.
The center of the town is really easy to navigate in - it's totally walkable and if you need to go a bit outside of the center - the taxis cost about $4-5 for a 5-10 minute ride (they don't use meters in taxis here as they do in DF and are generally more expensive, so you'll have to bargain a bit, however the minimum amounts to certain distances are pretty much set)
We happened to be in Oaxaca during its annual Guelaguetza festival - 2 weeks celebration dedicated to the good harvest and the goddess of corn. During this festival the town gets really busy - all 2 weeks there is a cultural program for every day: traditional dances, cuisine tastings, crafts markets, exhibitions, concerts, competitions, workshops, shows, etc. The point is that during Guelaguetza Oaxaca city becomes the host for representatives of all the indigenous groups of Oaxaca state who come to demonstrate their culture and traditions to everyone who's willing to experience them. All these indigenous communities take a huge pride in their customs, traditional costumes which are different for every single group and their way of life. So it's a very cheerful and colorful festival that takes up the streets from the very morning to the very night. (Plan for around 2 last Mondays of July to experience the best of Guelaguetza)
Oaxaca has really many very nice cafes and affordable restaurants serving anything from traditional Oaxacan cuisine to healthy/organic meals. We liked a lot cafe Alex with its huge menu, Don Juanito restaurants with specialties such as pozole soup and tacos al vapor, Biznaga (a bit upscale, but really worth it), for the best atmosphere and late evening events - cafe Nueva Babel is great. During the festival there are also many late night street food areas which serve excellent quesadillas, enchiladas and tacos.
If you want to experience the local pride - mezcal - read a bit about its production process and its different styles to better understand what you're drinking (in very short, it's an alcoholic drink made by elaborate process of cooking the head of the maguey cactus for several days in a clay oven and then distilling and bottling this concoction in many different styles) It's a very elaborate job and most of the mezcal producers still don't use any electricity powered devices or machines for it - in contrast to tequila, with mezcal everything is done by hands and horses, and thats why Oaxacans value mezcal as the product of their very personal care. Well, there are 2 things that won't go without the mention of "Oaxacan" - quesillo (type of string cheese) and mezcal. You can try mezcal in about any alcohol serving place in Oaxaca, you can even go up the hills to the farmers or visit a mescal production rancho around the town and try their house product.
There are numerous things you can do just outside of the town - visit the ruins in Monte Alban and Mitla, visit local villages that specialize on different crafts, explore the nature, visit the waterfalls Hierve el Agua (you can go there by a mini truck from Mitla), visit mescal plantations, caves and historical Indigenous settlements, the best what you can actually do is to get to know someone local who can tell you some more about hidden gems around Oaxaca town. You can take tours, but it's pretty easy to go places just by using collective taxis or local buses (ask how to get to the bus terminal for the second class - it's located in the West of the town and has all those cheaper travel options, e.g. 40km distance should cost about $1-2, collective taxis can also be found by this terminal)
That's it for Oaxaca, coming up next - Chiapas region and the town of San Cristobal de las Casas.