I’m not entirely up to date about the specifics right now, but I’ll try to explain the general idea as far as I understand it.
Canabis is not legal, but it is officially tolerated which means it is policy for police not to do anything about use and/or possession of weed. Coffeeshops are allowed to sell a small amount for personal use and I believe they have a maximum they are allowed to have in their shop. You can either buy they weed, pre-rolled joints or maybe some space cake. In any case, these shops are not allowed to sell alcohol as well… although some places just have a bar and a separate room where they sell the weed.
The difficulty is growing weed, since this is not allowed. Anyone is allowed to have one or two plants for personal use, but no more. So we have a situation where you can use it, shops are allowed to sell it, but no one is allowed to grow it. Still, all coffeeshops have stuff to sell, so people are growing it somewhere. Often in attics, often by tapping electricity (high electricity use is a dead give away) and often in the south of the country. Some political parties want to do full legalization so this problem can be dealt with, but nothing has happened yet and it doesn’t seem to be a big priority.
Most Dutch people find using weed fairly normal and after trying it a few times, they either lose interest or they remain using at home. As far as I know, none of my friends in their thirties have any interets anymore… maybe on a special occasion.
The coffeeshops in Amsterdam and other large cities are typically overrun by foreigners (either expats, exchange students or tourists), while locals may get their stuff and only light up at home. I used to live down the street from a largish coffeeshop (and bar next door) and I would never hear any Dutch. Even the doorman would often address people in English (and this wasn’t even in Amsterdam).
As similar thing happens in small border towns where Germans, Belgian and French people would go to get their stuff. Few of the people in these towns care for using canabis, but they do get confronted with the nuisence of these “drug tourists”. That is where the idea of the special ID came from; mostly for these border towns. One mayor also had the idea of just putting these shops somewhere outside the town, so the tourists wouldn’t bug the residents… but then, of course, the authorities in Belgium and Germany objected to having this place especially for Germans and Belgians, just over the border. I’m not even sure what the current situation is exactly.
As you stated, hard drugs are still very much illegal. But even then the focus is more on preventing harm (to society or individuals), rather than penalizing users. Addicts can get needles, there are methadone programs for people trying to get off heroine, etc.
While XTC is also very much forbidden, most big dance festivals have a specific place where people can get their pills tested. I’m not sure what they test exactly, but I guess it is for traces of other chemicals or other indications that pills are not safe. When a specific pill is found that is dangerous, it will be communicated all over the place (even on the news), to make people aware of the danger.