As far as the walking distance goes, everything in Telluride is within walking distance to everything else. It's a small town, so there's no need for taxis or anything like that. There is a free bus service in town, as well. So that's always an option. Just make sure you get on the right one. I once ended up in Mountain Village without meaning to!
It's approximately one mile from the edge of town, by the high school, to the festival grounds.
Lawson, on the other hand, is about 2 or 3 miles to the edge of town so a shuttle is better than walking.