Where can I do some Harajuku people watching?

I have been living in Tokyo for many years.

Harajuku folks are always acting their performance at the near from Meiji Shrine, where is located at Harajuku Station of JR山手線 JR Yamanote Line in Tokyo.

And you can also see them  at the Yoyogi Park which is very near from Meiji shrine and Harajuku station, where you are able to arrive there about 10 mins by walk.

You can find it at any shops in Harajuku.

If you can't find it there, you should ask Harajuku folks where you can get their clothes, they kindly tell you where to get those clothes ^^

Hi Kira,
Start by getting off at Harajuku Station and get out from the Omotesando Exit - Turn right as you come out and take another right turn and there is a famous bridge called Jinguubashi which is where all the kids are dressed up in cosplay (usually on weekends during the day) and some may or may not be obliging to pose for photos but try your luck!

If you have time for culture, I would suggest you also check out Meiji Jingu Shrine which is a short walk from Jinguubashi.

Otherwise, for cosplay type shopping, take the Takeshita Exit from Harajuku Station and walk to Takeshita Street a famous pedestrian street for crepes, costumes and character goods.

Have fun! 

Hop on the train (on a Sunday if you don't mind crowds - as this is usually the busiest day for a fashionable turnout as it's the one day a week everyone has off from school) and get off at Harajuku Station You'll probably be able to start a little people watching right when you get off. Make your way to Takeshita Street. It's a pedestrian only street and will likely be packed - both with teens and clothing boutiques to shop. Check out the side streets as you meander as well since Takeshita itself can be a bit overwhelming.

While you're browsing, be sure to stop at one of the crepe stands, such as Marion Crepes for a snack! I'd eat crepes in Japan every day if I could :)

Walk on until you get to end of Takeshita, and turn right which will take you past Laforet Harajuku which is a mall full of dozens of  fashion and accessory boutiques.

You'll find the Harajuku girls at, well, Harajuku, which conveniently has a metro stop.  Please be respectful though, while some may be out there performing, a lot of do not like being "stared" at and do not like their pictures being taken.

Where to experience the full Harajuku Otaku culture?? In Harajuku ofcourse! Harajuku Takeshita Street!

Not sure where to get some otaku outfits , im sure i saw some shop fronts when i was there but i wasnt too keen on dressing up. Just watch out for those African hustlers on the streets, they try to sell you stuff. Daiso was still the most interesting thing that appealed to me on this stretch, not a very long street. As a guy, i couldnt really rate this place overall.

The best street in Harajuku for people watching is Takeshita Street. 

Obviously Harajuku! If you take a walk around that area there are many small fashion boutiques that sell fashion products in that "genre". 

Harajuku is also in walking distance to Shibuya where you can find similar fashion items.