I've gone the last two years and will be there again this year. If you want to stay in Wilkesboro itself, camping is your only option at this late date since the local hotels are booked solid well in advance. In fact the one right outside the college campus where the fest is held is PERMANENTLY booked. They give preference to returning customers and there is a waiting list hundreds deep. I've been staying at a Holiday Inn about 30 miles away!
As I haven't camped I can't tell you anything about campground picking. I fly down so bringing a bass with me is a no-no. Makes me wish I knew how to play the fiddle

There is a picking tent on the site with semi-organized jamming.
Regardless of the picking situation the fest itself is well organized, way too much great music going on (over a half dozen stages!!) to catch everything. It's not really a bluegrass festival, there's other rootsy stuff...C&W, Celtic, blues, gospel, singer-songwriters, etc.