Night markets are a quintessential Taiwan experience. Young couples, families, retirees, and swarms of teenagers descend upon these markets to graze, gossip, flirt, play, and graze some more.
Lately, the ones in Taipei have been over-run by camera-toting tourists. For a real local experience, head to the charming town of Tainan. Generally laid-back and filled with colonial relics left behind by the Dutch and Japanese, Tainan also has one of the liveliest--and most local--night markets I've been to in recent years. Plunge into the food stall section and try specialties like oyster omelets, hand-made mochi filled with peanut or black sesame, and sausages made with sticky rice. Then head over to the cacophonous games section and watch punters try their luck for an enormous stuffed animal. (The kiddie ping-pong version of pachinko is particularly amusing/perturbing.)
Had enough? Push you way back through the crowds and if you're in luck, you'll find the vendor selling the most exquisite pink guava mixed with sour plum powder.