The resort strip and central beach are walkable, though traffic can make the main road unpleasant. The old village is slightly inland and rewards a slower wander in the evening, when the heat drops and the day-trippers thin out.
For the palace, Potamos Beach, Stalida and Sisi, use buses, taxis, a rental car or a bike if you are comfortable with Cretan roads. Scooters are common, but the combination of holiday traffic, heat and inexperienced riders deserves respect.