Xochimilco is to the south of Mexico City, and gives a glimpse at the effects of rushed urbanization over the years. It's a great place for tourists.
Though Xochimilco is far from the city center, it is well served by public transportation. First, take Metro Line 2 (the blue line) to Tasqueña (in a few stations on the way, you may see it spelled Taxqueña). As you exit the train platform at Tasqueña, make a sharp right turn to get to the Tren Ligero (light rail). The light rail does not accept Metro tickets, so you must buy separate tickets ($3) at the booth just outside the train turnstiles. Xochimilco is the last station on the light rail line, and the embarcaderos are just a short walk away.
At the Nativitas (not to be confused with the Metro station) embarcadero, take one of hundreds of boats (trajineras) through the canals which is all that is left of the lake on which Mexico City was built. This activity used to be widely enjoyed by Mexicans and it used to be one of the more authentic tourist experiences available. Nowadays however locals no longer consider it a nice experience because of the decay. The boats are colorfully painted and often bear the name of the owner's female child or other relative. There are set prices depending on the size of boat and length of the ride, though if you speak Spanish this can be bargained on. You can bring your own food and drinks for a picnic lunch on the larger boats, as they have a long table down the middle. As you travel down the canals, music boats float by with bands, mariachi trios, and marimba players, and for a fee you can have them float along beside you and play the songs that you request. As you travel you will see city life, restaurants, and greenhouses where flowers and plants are grown. Further beyond the city canals there is a wildlife preserve in which the original character of the chinampas (Aztec-era "floating gardens") may be seen.
There is a souvenir market along one part of the embarcadero with handcrafts, T-shirts, embroidered clothing, linens, sandals, and other souvenirs. In the off season, not all of them may be open. In addition, you will approached on the street by walking vendors. Across from Xochimilco Cathedral is a plaza where one can buy more handicrafts (as well as not-so-great second hand clothing imported from the US), but there is better merchandise across the street at the roofed public market. This is where the locals shop. Here you can buy produce, dried chilis, ice cream, juices, meat, fish, and clothing and items for baby bautizas (baptisms) such as elborate christening gowns, floral displays, and items relating to the child's patron saint. If you are lucky, you may be able to pick up some blue corn tortillas or patas (spiced, jellied cow's feet.)
On the canals, there are some trajineras which sell sweets, tacos, boiled corn or roasted corn on the cob. There are also "restaurant boats" selling simple meals of rice, chicken in sauce and tortillas. Vendors also stand on the shore in some places selling meals, drinks, candy, and ice cream to boats that float by.
In downtown Xochimilco, there are several areas of the market with food stands, as well as restaurants outside the market. There are also several pizzerias and taco restaurants nearby.
Generally, there will be a bucket of soft drinks, fruit drinks and beer on the boat; you pay at the end of the boat ride for what you consumed. Soft drinks and beer may be also purchased from vendors who float by in their own boats; a simple hand signal is enough to get them to come over. Some vendors also set up coolers on the banks. As with all food purchased on the canals, it helps to have exact change or close to it.