Where to Stay
Like Utila, Honduras, this is a scuba diving island so you will most likely stay in a dive centre.We stayed at Buddha View, which is just outside of the Sairee beach (main party area).
It is a great place with an awesome BBQ and some decent bars but I would recommend staying in Sairee so you can stumble home at night. Do some quick research to find the place best suited for your needs (eg – if your friends are diving but you don’t plan on diving make sure you don’t get charged too much). There are also some normal backpacker hostels in this area that don’t make you dive.
Where to Party
Koh Tao offers a variety of party options and you can spend over a week here if you want (especially if you take a scuba diving course). They have an awesome Pub Crawl here that I would recommend doing early in your trip to meet great people and to get acquainted with the island. It usually runs every Monday, Wednesday and Friday and you pay/sign up at Choppers (you also get a free t-shirt). Lotus Bar is a great spot on the beach most nights – it starts off really chilled (lot of fire-twirling) but usually ends up a big dance party. Keep you eye out for weekly events at The Castle nightclub as well as other parties you may hear through word-of-mouth.
Mostly Top-40 and some decent house at the beach bars. However, the Castle (which has different rooms) offers a variety of electronic music including house, techno, dubstep, and dnb.
During the Day
Koh Tao is known for scuba diving and is a very popular spot to get certified. An open-water certification should cost around $300, which should include your room. The island is cool enough that you don’t have to dive (but I would strongly recommend it). You can go on hikes, watch movies at the cinema, learn Muay Thai, do yoga, etc.