Holyroodhouse was probably my single most enjoyable activity in Edinburgh. I think I am probably most attached to it because it was in the gift shop of this palace that I bought my first book about Mary Queen of Scots (It has gone on to be quite an eventful affair - I wrote my senior history thesis about her, and now I'm researching a book about her mother, Marie de Guise). Needless to say, it had quite an impact.
The palace is quite different from the castle in that, while they are both royal residences, Holyrood was built as a palace, not a defensive fort. Today, it is the official residence of the Queen when she is in Scotland, and if she or the royal family is in town, the palace is closed. You will probably know if they are around, but make sure to ask ahead.
Originally it was the site of the Abby of Holyrood (rood is the word for cross), and there was a small guesthouse attached, but during the reign of King James IV, the home was enlarged to be used as a royal palace. James V added many more improvements for his wife Marie in the 1540s. It was further improved by their daughter, Mary Queen of Scots, and you can see her fascinating bedchamber on the tour.
The tour is a free audio tour that you can take at your own pace, which I really enjoyed. A surprisingly large portion of the home is on tour, including the Great Gallery, which houses many pictures of rulers of Scotland, the state chambers, and the ruins of the abbey.
The most famous part of the tour is the apartments of Mary Queen of Scots. She lived here during her short rule of Scotland in the 1560s, and included on the tour is the small room in which her wretched husband held a pregnant Mary at gunpoint and murdered her favorite secretary, Riccio, right in front of her. You can also see the spot where he bled to death. This is almost certainly apocryphal, but it is a neat little story.
My favorite part was actually the ancient abbey, first built in the 1100s. Today, it is ruined (thanks, John Knox), but you can still tell what a beautiful spot it must have been. In it you can see the broken tombs of Marie de Guise's two dead princes and James V's first wife, the young, beautiful Princess Madeline. It is a very peaceful, inspiring place.
The grounds of the palace are also open, and you can get a wonderful view of Arthur's Seat from the back of the palace.
Admission to the palace is £8.50 for adults and £4.50 for those under 17. You can also visit the queen's art gallery for an extra charge.