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Luxembourg City is small enough that you can get almost anywhere you need to go on foot, or on bicycle if you so choose. But it’s good to know that the extremely efficient bus system is there if you need it. The service is not always frequent, but it is far-reaching, so if you need to get somewhere be sure to check the schedule ahead of time, so you don’t miss the only bus for hours.
A regular short-distance ticket (billet courte-distance) costs 2 EURO, and is good for two hours around the city. It also allows transits between city and country buses and trains. If you plan to use the bus all day, purchase a day ticket (billet longue duree) for 4 EURO. This is one of the biggest bargains in Europe as you can use it on buses and trains throughout the country. If you are in town 5 or more days, you can purchase 5 tickets (longue duree) or 10 2-hour tickets for 16 Euro.
You can also order the "Nightrider" nightbus to pick you up and drop you off anywhere you like within the city. It’s similar to a taxi, but operates just Friday and Saturday nights from 7pm until 4am. Call to order the bus at least 20 minutes your intended departure.
More information on fares and schedules is available at the information desk beside the post office on Place Hamilius.
A word of warning, Luxembourg is going to be building a tram system starting summer 2015 which will likely create havoc around major stops such as Hamilius.