Hey there! I actually worked the fireworks on New Year's Eve, so I have firsthand on-the-ground experience about what to expect.
First things first: Crowd levels. The 31st will be insane, hands-down. It is singlehandedly the most busy night of the year.
The 1st isn't quite as bad, although it's still awfully bad -- you get people who bought multi-day tickets using up their other day.
The 2nd is around the same level you'd have at a high point in July. It's not the craziest day ever, but you still have long waits for everything.
If you want to watch everything from in front of the castle, you need to start waiting before noon. The entire castle will be already cordoned off, and there will be a giant stage in the center. If you start waiting at noon, you'll probably be in the front row, but waaaay off to the side. And you're going to need to stand there for 12 hours. Oh, and there's nowhere to go if you have to go to the bathroom -- guests asked me if I could let them under the rope (where the stage was) so they could use the bathroom, and I had to give them a flat-out "No," simply because there's too much sensitive equipment in the way. They couldn't get out behind them because there was a solid block of people blocking their path, so they just held it for hours.
If you want to be slightly less crazy, I would find a spot around 6. That's going to be the only time you're going to get a good spot on Main Street. The moment the "usual" fireworks go off around 9, the Main Street crowd level will freeze -- and anywhere you got for the early fireworks is going to be your spot for the later fireworks.
There are going to be several walkways set up to guide traffic, and CMs like myself will be out there pushing you through these walkways. New Year's Eve is by far the most taxing day ever, and the CMs will show it. You can be the nicest CM ever on any other day, but New Year's Eve will turn every CM working the fireworks into the meanest, rudest cast member ever. Do not expect the parade CMs to be nice to you on New Year's Eve (although they will be nice to you on the other days). The guests are fighting us every step of the way, because they all want to be in front of the castle, and there's no room except in the walkways, which have to remain walkways. We will be struggling to keep the walkways clear, and we'll easily have 6-7 CMs in one area clearing out every single guest that tries to stop because there is no room to watch anything.
The worst thing that can happen to you as a parades CM is what is called a "lost walkway" -- when so many guests stopped in an area that it becomes clogged and nobody can move. This will happen across the entirety of the Hub area on New Year's Eve, especially around 11:00. There will not be any movement, anywhere. Guests will flat-out ignore any CM requests. Guests will punch CMs in the face or purposely hit them with power scooters because the CM wants to get the walkway clear. There will be no room in the viewing areas, and this makes guests mad, because they want to watch the show, and how dare you stop them from watching the show? Do you even know how many hundreds of dollars they spent to come here, and now you're ruining everything! I thought this was the "Happiest Place on Earth!"?!
I'm not exaggerating. Everything I just mentioned happened last year. Those quotes are direct quotes that guests said to me as I tried to rescue my walkways. A friend of mine got punched in the face (and security couldn't get through the crowd to help). Another friend of mine got hit by a power scooter on purpose (security was right there that time, escorted the guest from the park, and permanently revoked the guest's annual pass). If anything, I'm understating what New Year's Eve is like. New Year's Eve is the worst day of the year, period.
There are places that are not on Main Street that will be having New Year's Eve stuff. I can't speak as to the quality of their entertainment, since, again, I was working parades around the castle. I can tell you what was going on around the castle, however:
As I mentioned, there was a giant stage set up. Additionally, we had a giant "production studio" set up by the Walt and Mickey "Partners" statue, which had all the cameramen and stuff mixing for broadcast on TV. There were a couple small TVs that were showing a live feed of ABC (where the show was being broadcast), which would cut between Disneyland and Walt Disney World.
Onstage, we had a (non-celebrity) host and a DJ. I believe the host started the party around 8:00-ish -- the entirety of the Hub area was already full by this point. The host would come out and talk about stuff until 9:00, when Walt Disney World hit midnight. We had our show go off "in sync" with Walt Disney World's, so that guests could watch both shows (or at least, that was the plan -- in practice, something went wrong backstage and we wound up running the same show twice).
After the 9:00 fireworks show, the host came back and helped "get the party started." He brought out a DJ, who played various popular songs. Every so often, the DJ would play a Disney song for a scripted jokes -- "Let it Go" was played once, as was the "Ducktales" theme.
After an hour or so of DJing, the host would introduce the live band as they came out onstage. The live band last year (this year?) was Tomasina -- they play at the Tomorrowland Terrace fairly often on "regular" days. The set they played wasn't that much different from their regular set, and then they would step off and the DJ would take over again. This repeated until like 11:30, when Tomasina stepped off and the host came back. I believe this time he took Mickey and Minnie Mouse onstage with him (although I honestly can't remember if he did that earlier or later in the night -- as I mentioned, I was having a horrible time, and I prefer to block all memories of it from my memory). Anyway, they did their thing and at midnight we launched our fireworks. The band came out again (I think) for one more performance, then the DJ kept going until like 2 AM. The guests started to clear out after the midnight fireworks, thankfully, and we were able to restore our walkways.
If you're going to go on New Year's Eve, I would say go to California Adventure. They have a special World of Color show, and it's not going to be as crowded as Disneyland. Take the worst crowd you've ever experienced at Disneyland and multiply it by about 10 -- that's how bad it is on New Year's.
As I mentioned, things will calm down (relatively speaking) on the 1st and 2nd. It is Christmastime, and Christmas is the busiest season by far at the resort. People tend to freak out about Christmas-themed things, and we have a lot of Christmas-themed things going on. Lots of people flock to see our Christmas parade, so get there 1-2 hours early to get a seat. All the attractions will have long lines by virtue of the fact that it is Christmastime, so bring something to do.
You have to go in with the mindset that things are going to be crazy. Expect the worst, and then you'd be pleasantly surprised if things are better this year than they were last year (they won't be, but I can be optimistic). Don't rush, take your time, and please be nice to the poor frazzled cast members. You won't get much done, so go to enjoy the atmosphere more than anything else.