A good place to people watch is Dam Square. Almost all tourists pass through Dam Square at least once during their visit.  What this means to you, the people watchers out there, is that you will see people from every walk of life, fellow tourists, transplants from all over the world, and of course, the Dutch. There are a few restaurants where you can grab a seat, order a drink and sit awhile or you can sit on the steps below the big statue depending on your mood. The square has several street performers almost every day, and regulary hosts other events, such as fairs or competitions. 

Also not to be missed is the Red Light District where you will have as much fun watching the tourists as the official entertainment. Where else can you see a group of little elderly Asian women giggling as they come out of a peep show?! Do not be afraid of the RLD, due to considerable police presence it really is safe and totally unique. 

Next would be the Leidseplein at the end of Leidsestraat.  This square is surrounded with restaurants, street vendors/performers, coffeeshops, and shopping.  Almost all year little  tables and chairs are set out under graceful shade trees for al fresco dining and people-watching.  Even the smaller cafes on side streets, which can be some of the loveliest, put up as many tables and chairs as they can.  Most of the trams pass through here so there is lots of activity. Another great location is the Rembrandtplein.  It is along the same lines as Leidseplein but a little lower key.  A fun square with a variety of places to sit, order something to drink, and enjoy the passersby.

 Whenever the weather permits it, Amsterdammers flock to the Vondelpark in large groups. Especially during warm summer days, you can hardly see the grass because of all the people. This is a great opportunity for people-watching, since many people treat their spot in the park as their own backyard, bringing food, drinks and music and sunbathing in their swimwear (or less). During the winter the park is still pretty popular and a great spot for a nice walk.