The festival itself is held on a community college campus. They take over the whole campus. There are 12 stages going at once, with some sound overlap on the outdoor stages(but not much!). They use a lot of the indoor venues too, and this is where the music can be a lot more fun. This is the most well organized festival I have ever attended. A LOT of thought has gone into how to manage a large crowd, and keep it fun for everyone. The stages sound is all run by Nashville sound people, and they do know what they are doing. Sometimes, it gets a little loud, but not very often. Good music does NOT need to be loud! The caliber of the entertainment is, as you said, "how could you go wrong!".
The camping and parking is all off-site. There are shuttle buses that constantly run from the various off-site campgrounds to the festival. Each camping area has their own transportation to the festival grounds(free of charge/donation). Many are old school buses, but some are nicer.
There are basic campgrounds at Riversedge(dry camping, flat ground, the major off-site parking area also) and Sewerfest(dry camping, near the sewage plant, but a nice flat area). Then there are all the community organizations that seem to have their own camping areas. The local YMCA has a field with water and electric, and use of the Y when you camp there(think good showers, indoor pool, etc). The local VFW has something similar, as does the Wilkesboro FD. There are others that I don't know much about. There is a list of the campgrounds on the Merlefest page.
I stayed at the NORTH Wilkesboro VFD/Rotary campground.
http://www.nwfd.us/merlefest_camping.htm This is different from the FD one in Wilkesboro. This is a smaller area that was built as a campground(65 30A/water sites), and dry camping on others. Also a large tent area. Free pumpout is available, as well as a dump station. Nice restrooms/showers, that are clean. Instead of old school buses, this site uses 15 passenger, air conditioned vans to transport you to the festival. They run every 1/2 hour, or more often if needed. If you have an emergency and need to get back to the campground, they have a number to call for a fast pickup. The firemen manage the campground, and are there 24 hours a day. Firewood is free, and delivered. You do need to rent a fire pan for $5 for the week from them. They have an indoor area for jamming/picking, which seems to happen each night.
There is no shade at most of the campgrounds.
This was my third year in a row at the North Wilkesboro campgrounds, and I'll be there next year too. They usually have 5-10 water/electric sites available each year, as people don't renew. Existing campers have the first renewal rights at this campground. There seemed to be some dry sites available this year. They will also rent the dry sites out by the DAY, not just the full festival. This is different than many/most of the other campgrounds.
So, all-in-all, I drive 550 miles(one way from Northern Ohio) to get to this festival. It's a great start to the music festival season(which is what I have my RV for). It's an amazing lineup of performers(that change some each year). I'll be back again next year.