Well I started playing guitar about 3 years ago and actually learned at festivals and jams. I would sit outside the circle and try to follow the chord shapes. I bought books and began teaching myself the basic chord shapes and progressions. You want to learn to play in a flat pick style with alternating bass notes. It's funny because flat pick is how I learned and now three years later I am trying to learn to strum and it is really, really hard.
Bluegrass songs are pretty simple. Typically 1-4-5 chord progessions. You'll see a lot of folks using capos. Festivals are the best place to learn to play. At night just sit a little behind the circle and try and hang in there But during the day find one or two kind souls who will sit with you under a tree and teach you some things. When I first started playing my goal was to learn three songs really well so that when I got into a circle I could play and lead them. I quickly learned that everyone appreciates singing and so on the songs where I might not be able to play on the guitar I could harmonize. Singing is always welcome in a circle.
I have been to some festivals in Arizona where the circles are not very nice and unless you play fast, furiously and just like Bill Monroe you are not welcome. I never experienced that kind of exclusion in Telluride or Pagosa. People are more than willing to share what they know and help you out and encourage you.
Finally the last bit of advice is to listen to it. Get as many recordings as you can and listen. It helps a lot to have it all in your brain.
My name is Jess and if I make Telluride next year and you are there I can't wait to pick with you!