The compact grid of narrow lanes climbing back from the Balcón de Europa is the Nerja that pre-dates mass tourism — whitewashed houses with iron-grilled windows, ceramic plant-pots on the walls, the smell of jasmine in the evening. The main streets (Calle Pintada, Calle Granada, Calle Almirante Ferrándiz) are pedestrianised in summer and lined with small bars, ice-cream parlours, and shops selling olive wood and ceramics.
The old town is best explored in the early evening when the heat drops and the locals come out for the paseo. It's also where most of the better restaurants are concentrated, away from the higher-priced spots directly on the Balcón.