Most guidebooks will tell you that Christiania was founded by hippies that took over some abandoned military barracks in Copenhagen and founded their own free city, independent from Denmark (complete with its own flag), where they legalized drugs and have been operating there, completely illegally, for more than thirty years. While this is basically true, this description can be somewhat misleading.
First of all, technically it is true that they are here illegally, but illegally in name only. The Danish government is well aware they are there, have been there for decades, and seems content with this fact. Sometimes it even appears the Danes have embraced the Christianian community. True, none of the world's governments recognize the "Free Nation of Christiania" but it isn't illegal in a way that should cause you to worry about a police crackdown on the place while you are visiting.
Also, the citizens of Christiania have only legalized pot and hash. Possession or use of hard drugs within the colony is dealt with very harshly.
Above all, remember that Christiania, while certainly not for every visitor to Denmark, is perfectly safe.
I visited here on a field trip for one of my classes. As part of our tour, we visited a couple of the many hash vendors in the colony where we were taught how to inspect the hash for quality (I certainly didn't learn anything like this in any of my classes in America!). I don't remember much about how to inspect it except that the darker, oilier hash is apparently the best.
While they seem set up to sell the hash in bulk, they advise you not to purchase more than you intend to consume within the walls of the compound, since hash is illegal in Denmark (although, to be honest, I don't think it is dealt with very harshly).
There are more interesting things than drugs in Christiania, however. True, you probably should avoid it if you are disturbed by the thought of pot or hash being consumed in your presence, but don't be turned off on it just because you aren't interested in consuming any yourself either. The Danish teacher who took us on the field trip here professes never to have consumed a cannibis product and yet visits here regularly. The colony has a charming (if a bit dilapidated) quality and hosts a thriving community of artists and craftsmen and, since the citizens of Christiania refuse to pay their Danish taxes (although many of them do wander into the city once a month to pick up their welfare checks), it is a great place to shop cheaply. Metalworking, in particular, is a local specialty.
Like I said before, this isn't for everyone, but if you are a little open minded, you may find it very interesting, and I guarantee Christiania will be distinctly different from anything else you see in Copenhagen.