Lijiang's Old Town is one of the best-looking places in China and one of the least lived-in. Dayan grew up as a market town of the Naxi people, a trading post on the tea-and-horse caravan routes toward Tibet and Burma, and the Mu family ruled it as hereditary chieftains for centuries. Then the February 1996 earthquake flattened much of the region, the town was rebuilt to UNESCO standards, and in December 1997 it went on the World Heritage list. Tourism followed in huge numbers, and most of the original residents have since moved out and rented their houses to businesses.
So the honest summary is this: the stone lanes, the canals and the wooden roofs are real and worth two slow mornings, and almost everything sold in them is not. The reasons to give Lijiang five days are outside the lanes. The Naxi still keep a script of their own, often described as the only pictographic writing system still actively maintained, and an orchestra of old men that plays Ming-era ritual music. Two villages to the north, Baisha and Shuhe, are quieter and older than the town. Jade Dragon Snow Mountain rises to 5,596 meters 25 km away, and one of the deepest river canyons in the world is a day trip from the door. Altitude is the thing to plan around: the town sits at about 2,400 meters and the mountain platforms at 4,500 and above.
The plan is built around that. Day one is the Old Town at an easy pace, day two the Black Dragon Pool, Baisha and Shuhe, day three the mountain, day four Tiger Leaping Gorge, and day five a loose day around Yuhu and Lashi Hai that doubles as your weather buffer. Dali, Shangri-La and Lugu Lake are under More time. Start on a Monday: the mountain and the gorge then fall on Wednesday and Thursday, away from the weekend crowds, and the loose day lands on a Friday. Avoid Chinese holiday weeks (early October, Spring Festival in February). Read Before you go first, because the entry rules, the Old Town fee and the gorge trails all changed in the past two years, and the China country page has the background. Chengdu and Guilin are the nearest guides in this series.