Amsterdam is an interesting place and deserves far more credit than it gets. I am by no means an expert, but I did have the chance to learn a few things while there. In short, the Dutch people are extremely tolerant. It is not a liberal or conservative principle. It is a way of life; a certain practicality and laissez-faire approach to an individual's choices.
Unfortunately, this tolerance most famously manifests itself in its "decriminalization" of soft drugs and legalization/legitimization of prostitution. Hence its international reputation is that of a drug and sex heaven. That is unfair. Although groups of 18-25 year old males flock to the city in search of a good time, the Dutch tolerance is not about that. Around only 5% of the population smokes marijuana, and predominantly tourists stroll the streets of the red light district.
These policies are indicative of an attitude - people can make their own choices. It is their business. If someone chooses to indulge in soft drugs, so be it. Might as well let it happen and get some tax revenue. Same with prostitutes. Or even gay marriage. Simply, who cares? It isn't hurting anyone. People should be able to make their own choices, without interference.
I'm not sure this is a direct consequence of tolerance, but people seem very happy there. And they have a gorgeous country, with lovely cities. The cuisine is quite international. The country was at one point amongst the most powerful in the world.
Amsterdam has been one of the most interesting places I have visited thus far in my travels, and I look forward to going back and learning more about the city - and country - soon.