One other item to add: the local smoked cheese, oscypek, is sold on the street by old ladies out of baskets. At first I thought it was going to be a bakery item the way it is molded. Looks like a fancy scone.
But the best is if you can find it on a menu anywhere grilled. I had this at a fair (grilled over coals) and it is one of my favorite food memories of Poland.
Check out this link:
One of my favorites in Cracow (since my childhood no less) is Balaton restaurant on 37 Grodzka St. – they have a delicious dish called the Hungarian potato pancake but other dishes are great too. Service is excellent there unlike some other places around town. Middle class locals eat here but since its write-up in the Lonely Planet more tourists started to visit too. (Grodzka is runs south-east off the main square)
For locals only type of a place and cheap as well as delicious go to Jadlodajnia U Pani Stasi on 16 Mikolajska St. (just north-east of the main square and on the north side of the ‘Little Square’). This place is mainly for lunch until 3pm or so, gets crowded and be prepared to sit with strangers at the same table, which is a fun local experience I think. Absolutely everything here is delicious.
Finally it wouldn’t be a complete experience if you didn’t go to one of ‘bar mleczny’ places. These VERY inexpensive self-serve eateries were the idea of the communists who subsidized them to help keep the prices down for the local working class populations. Since the fall of the regime these jewels have been disappearing as subsidies are getting cut but a few are still hanging on. My all time favorite of these in Cracow is also on Grodzka street (as the above Balaton restaurant) but I can’t recall the number; it’s further away from the square than Balaton however so if you just keep walking and watch on your right hand side you’ll eventually come across it. Inevitably there will be a huge line of people inside but don’t be discouraged because it goes very fast. The place is run by a family – some relatives cook, some run the front cash register and hand out the dishes (all delicious; be sure to have nalesniki at some point) as they emerge from the kitchen. A true local place.
My one big tip is Restauracja Galicja in Kazimierz.
Kazimierz is the old Jewish quarter. Clustered around ulica Seroka are a good half dozen well-touristed places. But walk thru the front garden of Klezmer Hois (a rather expensive place with live music) to the busy thorofare (Starowislna) on the other side, turn right, and the first restaurant you encounter should be Galicja. No tourists, homey food, Galician style. Had a wonderful lunch there for about $4 per person.
I found it hard to go wrong anywhere in Malapolska, with one exception. In Krakow, avoid the Chlopskie Jadlo, a rather famous old times 'themed' restaurant for Polish tourists. The real deal is available almost anywhere you go for half the price.
Most tourists stick to a very narrow swath in Krakow. Stray even a half block and you will get off the beaten path quickly. Also, there is a VERY lively market just outside the planty on the North side of Krakow. Highly recommended, though I don't know if it operates in the winter.
One other point I'd like to make: the Rynek (Market Square) in Krakow is enormous, and dwarfs the rest of Old Town, which is not a big area. Because of that, almost everyone who lives and works in this part of Krakow must pass thru the Rynek at least twice a day. It is very much a place for Poles as well as tourists.