This is Dali Old Town, not the 18 miles south Xiaguan located, also known as Dali City functions (with the train station and airport). It is the center of the Dali Bai-folk and one of the most popular destinations in the country. The old town enjoys a well-kept village in the streets of bubbling streams, restored city walls, the climate in 2000 m altitude, but above all with the surroundings: the lake Erhai and 4122 m Cang Shan mountains - ideal for hiking, cycling, and rock climbing. You can talk to the good people over at Climb Dali for more information about outdoor tourism in Dali.
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