The best thing to do on the Danforth is to find a sidewalk cafe and sit there drinking coffee, wine, beer and eat Mezes. There are plenty of options here and they all are well worth it.
Taste of the Danforth happens the second weekend in August. During this event, the Danforth is closed off to vehicular traffic and there is a massive street party. Don't drive and hope to find parking. Take the subway to either Broadview, Chester or Pape. Of course there is a Greek theme with tons of BBQ'ed souvlaki but there is other types of food too. There are midway rides for kids too. Last year there were almost a million people on the street and it was very festive. There are 2 stages. The main Greek stage is at Logan.
At the west end of the area there is a very popular Book City in the Carrot Common area which is great for hanging out. Also within the Carrot Common is a cool rock store where you can buy all sorts of crystals and there are some telescopes there too.
South of the Danforth at Withrow is the large Withrow park, which has a great area for young 2 - 9 year old kids, an area to let dogs off leash and a skating rink in the winter.