Great location for exploring Dunedin. No problem to walk into the city but you will want to catch a bus or taxi back, or just drive in as parking is pretty easy.
Louise provided a couple of "GO" cards, the local public transport prepaid card which you can top up on the bus. I found the driveway a little snug to get into and parked on the road after the first day. Found the local restaurant Copper and the restaurant at Glenfalloch gardens to offer excellent meals at very good value.