Mr. and Mrs. Ray Brown of Walnut Creek, Calif., and their daughter, Pat, 22, are stopping here on the fourth day of their eight-day "Colonial Tour" of Mexcico. They are staying at the Posada de Don Vasco, the biggest hotel in town, the plushest, the most expensive, and with possibly the most disdainful staff. All the tour groups stop at the Don Vasco, on Wednesday and Saturday afternoons, and leave on Thursday and Sunday mornings. The turnover may explain the staff.

The Browns came to Patzcuaro from Mexico City by way of San Miguel de Allende and Guanajuato. After a late lunch, they are meeting their guide at 3:30 p.m. for the highlight of every first-time visitor's visit here--a trip to Janitzio, the cone-shaped island in the middle of Lake Patzcuaro, where red-tiled roofs climb the slopes in beautiful confusion and butterfly fishermen paddle out to the tourist launch to have their pictures taken.

They are called butterfly fishermen because their nets, looped over long, curved poles, are thought to resemble butterflies. In times past, men used these nets to fish Lake Patzcuaro for pescado blanco. But times and techniques have changed, and now the butterfly fishermen fish for tourists. Take a picture and pay.

It will be past 6:30 and dark when the Browns get back to the Don Vasco. They will barely have time to bathe and dress for the buffet in the courtyard. There will be singing guitarists and lively mariachis. There will be a lively performance of the Dance of the Little Old Men, a put-on created by conquered Tarascan Indians to mock the Spanish. It is one of Patzcuaro's enduring delights.

And tomorrow morning, after a scant 20 hours, after sampling as much of Patzcuaro as their tour allows, the Browns will board their tour van and depart without realizing--through no fault of their own--the complete charm of this most charming town in the mountains of Michoacan.

Patzcuaro is 240 miles west of Mexico City in the Mexican State of Michoacan. The population is 24,000, according to a sign at the city limits, but the town outgrew the sign years ago and the total now is about 40,000. The place sits at 7,200 feet, a mile or so up the hills from Lake Patzcuaro, a magnificent body of water that has been drying up for the last 500 years yet still presents spectacular views from any mountainside around and from almost every turn in the highway.

There are seven islands in the lake and half a dozen villages around it, all Tarascan. Patzcuaro was a hub of the Tarascan empire when the Spanish arrived in 1522 and almost conquered the Tarascans into extinction. It remains hauntingly Tarascan today, despite a culture imposed over more than 300 years of Spanish colonial rule.

We found this town in the summer of 1975. After the hurly-burly of Monterrey and Guadalajara, and the resort pace of Mazatlan, Patzcuaro was unexpected, irresistible tranquility--pretty, peaceful, quiet, calm, serene and friendly. Our two-day stay seemed to guarantee that some day we'd come back.

We are back now for two months, to soak it up and test it as a place to spend a long, long time.

Our apartment ($100 U.S. a month) is furnished, except for linens and kitchen utensils brought from home. Our landlord is Ralph Gray, a soft-spoken Nebraskan pushing 60 who has lived here 32 years. For a great deal of that time, he and his wife, Vicki, who is Mexican, operated an odd and extraordinary establishment that was at once a high-class Michoacan crafts boutique, an antique shop and a furniture factory. Now Ralph has retired to concentrate on being the artist he originally trained to be, leaving management of the establishment to his son, William.

The kitchen of our apartment looks out on the main road curving up into town. The road is flanked by double rows of 60-foot pines, whitewashed at the base to a height of about six feet. (There are 10 men on the whitewashing crew, five to each side of the street, leap-frogging each other in sober determination to slap whitewash on the next available tree trunk down the hill. Their faces, their clothes and any number of places along the road are daubed with whitewash.)

Like all the people in Patzcuaro, we live behind high walls built flush to the street. We never know what lies behind other walls until someone opens the gate.

A wave of purple bougainvillea has splashed up behind the wall across the street and is breaking over the sidewalk. Watching from our kitchen, sipping breakfast coffee, we clock the morning without looking at a clock.

When the gate opens and a green VW van backs out, it is 7:15 a.m. The driver is Sen or Antonio Gomica, 49. Behind his wall are his shop, dealing in linens; his wife, and five of their 11 children. A little girl with a little satchel closes the gate and hops into the van. It is Myrna, 13, and her father is taking her down the hill to school.

A man in a yellow jacket and gray pants trudges up the hill, wheeling a bicycle with five blocks of ice tied to the rear. Three enormous Coca-Cola trucks grind up the hill, spewing black fumes. Two dilapidated city buses, so loaded that passengers are hanging from both doors, roar down the hill, spewing black fumes. A man strains to push a vendor's cart up the hill. Another strains to keep a vendor's cart from running away from him in the opposite direction. The Flecha Amarilla bus goes by on its run to Guadalajara. It is rush hour in Patzcuaro.

When a young woman with long black hair bangs on the gate across the street, it is 7:30. The young woman is Elvia, the maid, 16, wearing a cream-and-green plaid dress, bright blue sweater, white knee socks and brown shoes with crepe soles. The long black hair is caught at the nape with a pink barette.

Elvia sweeps the sidewalk in front of the wall. Everyone sweeps the sidewalks of Patzcuaro in the morning. Most sweep into the street, but not Elvia. Elvia's sweepings are in a neat mound at the base of one of the pines. She touches a candle to the mound, and the air fills with the aromatic smoke of pine needles.

Gomica operates "El Arte de las Mantas," selling hand-made, embroidered tablecloths and napkins, dresses and shirts, produced by families working in their homes. Their industry is part of a legacy that goes back 450 years to a remarkable man whom the Spanish appointed bishop of Michoacan and sent here in the 1530s to temper the terrorism of the Conquistadores. His name was Don Vasco de Quiroga.

In addition to building churches and establishing hospitals, schools and orphanages, Don Vasco encouraged the talented Tarascans to concentrate on distinctive handicrafts in each of their villages--guitars in Paracho, copperware in Santa Clara, reed weaving in Tzintzuntzan, lacquerware in Uruapan, cambric and embroidery in Eronguaricuaro. As a result, Michoacan today probably is richer in folk art and crafts than any other part of Mexico, and Patzcuaro is at its heart.

The town's vast, grassy main plaza, with its fountain and ancient trees, bordered with arcades and the mansions of former Spanish rulers, is named for Don Vasco. His statue stands in the middle, as it does in countless other plazas in Michoacan. Hotels, streets and stores are named for him.

His cathedral, built in the 1540s and still in use, is a short block and a steep hill up from the plaza. His basilica, built in the 1550s and now Patzcuaro's principal church, is a block farther on the same hillside. Between them is the Spanish Colonial gem of a building that housed the college he founded in 1540. Today it houses a museum of folk arts, a popular tourist attraction.

People who live here consider Patzcuaro a tourist town. It doesn't look or act like a tourist town, yet one of the guide books counts 27 tourist hotels.

Pedro Ponce is the waiter in the restaurant of the Posada la Basilica, a small inn across the street from the principal church. The Posada has 11 rooms with fireplaces and a man who comes in at night to lay the fires. Winter and summer, nights get chilly. Ponce is 44, short, round and smiling, the father of five girls and four boys ages 9 to 21, and has lived in Patzcuaro all his life. When you come into the dining room, he slips quickly into his yellow jacket because there never seems to be anybody else in the dining room and he has slipped out of the jacket to be more comfortable.

The dining room is off the courtyard behind the Posada's walls and, because the Posada is on the hillside, too, it has possibly the best view in town--down across the red-tiled roofs with their TV antennas and sunning cats, across the treetops to the tower of a church beyond the plaza, down to the library that used to be a church, and finally to the lake and the green hills rising sharply into green mountains.

The balconied walls along the streets are painted red to a height of about four feet, then white to the roof line, where red tiles overhang the sidewalk three feet or more on heavy timbers. If a gate is open, there is always a glimpse of garden.

Some say Michoacan is the greenest state in Mexico. Some say Michoacan gets too much rain. The yearly average is 44 inches, mostly from May through October, mostly in showers in the early afternoon. But mostly the sun shines, and the days are bright and warm.

Sen ora Margarita de Garcia, a woman of elegant mien and lyrically accented English, lives a block and a half from the main plaza in a 200-year-old house furnished with ancestral Spanish antiques. Behind her gate is a courtyard garden with roses, overhung by a giant red poinsettia tree and ringed with red geraniums in huge clay pots.

Her husband is a former mayor of Patzcuaro. She is president of an organization of volunteers engaged in civic and charitable works. Their current project is to establish a home for the aged. They have acquired the land and a ramshackle hacienda. Now they need money to restore the hacienda.

De Garcia takes us to visit the Hospital Civil, a 300-year-old medical facility that has served as a hospital since it was built. Behind its walls is another courtyard garden, much in need of tending but blooming nevertheless with iris, lantana, roses, daises, snapdragons, chrysanthemums, poinsettia, callas, day lilies, fuschia, nastursiams, dahlias and camellias.

Dr. Rodriguez, who appears to be in his 30s, has been chief of this 20-bed hospital for seven months. In that time the hospital has performed 71 operations and delivered 315 babies. Dr. Rodriguez would like to establish a family planning service. The nuns who staff the hospital would not.

Our laundry is on Paseo Teran, opposite the Church of San Francisco. You don't go inside. You hand your clothes through the window.

Inside are the washers and dryers and possibly the prettiest young woman in Patzcuaro. She smiles and takes our bundle, turns quickly and quickly turns back, speaking Spanish we don't understand. Several smiles and gestures later, she communicates: Laundry is accepted only in batches of three kilograms, and our batch is overweight. See, there are the scales. Out come two hand towels, a wash cloth and a robe. The rest will be ready at 6 p.m., she says.

It is. The possibly prettiest girl in Patzcuaro hands our clean clothes back through the window, neatly folded in a large clear plastic bag--three shirts, three undershirts, three briefs, three pairs of socks, a pair of pants, two pairs of slacks, three blouses, two camisoles, two bras, six panties, a hair net, a pair of knee-highs and a sweater, all admirably laundered for the peso equivalent of $1.26.

The music of a brass band rises behind the walls of the Church of San Francisco across the street. This, the young lady says, is the Fiesta of St. Francis. One of the charming things about Patzcuaro is that there is always reason for a fiesta.

A troupe of young amateur dancers, wearing the masks of little old men, is doing that marvelous dance in the middle of the church yard. It's a dance to make a Norteamericano tap his feet and laugh, but the ring of Tarascan faces around the dancers is somber and unsmiling. Tascarans have a reputation for being reserved and undemonstrative.

There are food stalls with temptingly delicious aromas and tacos we dare not sample for fear of later repercussions. There is a booth selling chances on sweaters and blouses, at which we win a bag of cookies and candy. There is bingo with cards that have pictures of plants and animals, instead of numbers, and plastic kitchenware as prizes.

Inside the church, in a glitter of lights and candles, a Mass is ending. The acolytes wear the hooded brown robes of St. Francis. The altar is decorated with 17 enormous golden vases crammed with white gladiolas.

On the way home we stop at the bakery, where the evening's supply of fresh pastries has just been placed for sale. Take a tray and a pair of tongs and pick what you want--long and twisted, round and puffy, flat and flaky--at the peso equivalent of 4 cents each.

Back in the apartment, unpacking the laundry, we discover that the possibly prettiest girl, before folding the shirts has buttoned every button.

One of the guidebooks recommends going down to the embarcadero early Friday morning for the picturesque sight of Tarascans paddling their dugout canoes across the lake to the weekly Indian market.

At 5:50 a.m., the dock is cold and damp, deserted except for a pacing watchman waiting for his replacement. The food stalls, the restaurants and souvenir stands are shuttered and silent. Mist is rising from the lake into the mountains, and Janitzio Island emerges slowly from fog into sunlight. A giant statue of Jose Morelos, a hero of the war of independence from Spain, stands atop the island. At this distance, he looks like a stiff, stone doll.

A speck in the lake turns into a dugout canoe paddled by two Indian couples--a man at each end and the women in the middle. They pull the canoe onto the embarcadero's grassy embankment and head toward town, the women carrying the oars. A motor launch pulls in and unloads a uniformed flock of school children who run to the bus stop at the entrance to the pier. The launch also unloads a very fat, barefoot Tarascan sen ora in a voluminous black skirt, who struggles up the embankment with three covered baskets. So much for picturesque.

The Friday market, once so vibrant, offering quality in quantity, is almost a caricature, with pottery you might get in a U.S. supermarket for $7.50 and a coupon. But the daily market, where we buy the necessities of life, remains an exhilarating crush of people, noises, colors and smells.

Translating pesos to dollars, our fat, crisp carrot costs slightly more than a penny. The vine-ripened cucumber is four cents. A liter of Oso Negro gin is $2.71 and a carton of Mexican-made Salems is $2.86. If one sen ora's garlic seems expensive at 1.2 cents a bulb, try the next one at .9 cents.

The nearest thing to a supermarket is Conasupo, a government-subsidized grocery that suggests 7-Eleven in birth pangs.The large middle-aged sen ora at Conasupo's cash register is curt at the sound of our bastard Spanish. But when, in exasperation, we burst into English, she bursts into conviviality. Her English is almost flawless. Next week, she says, she will close the store for two weeks and go to visit her son in Los Angeles. Where do we live and how long will we be here? When she returns from Los Angeles, the sen ora has a new coiffure, and her hair is blacker and shinier.

Patzcuaro is most a tourist town from Oct. 30 to Nov. 3. It is virtually impossible to get a room here then.

Nov. 1, All Saints' Day, is a national holiday. Nov. 2, All Souls' Day, is also a holiday, celebrated across the country but observed most particularly in the environs of Patzcuaro and most notoriously on Janitzio Island. Comparatively, it is Derby Day in Louisville, Race Day in Indianapolis, the Fourth of July at the Washington Monument. Mexicans pour in from all over the country to take part.

It is not flashy like the Derby or the 500. In fact, it is studiously somber. It is so somber that eventually you may suspect there is a Chamber of Commerce lurking in the shadows to be sure it stays this way. It is called the Day of the Dead.

The observance begins at midnight, when the clock ticks from Nov. 1 to Nov. 2. Seemingly out of nowhere, Tarascan women in black dresses and black shawls appear at the graves in Janitzio's cliffside cemetery. They light tall, fat candles and erect elaborate graveside decorations, chiefly featuring marigolds. (Yellow was the color for sorrow even before the Conquistadores.) Then the women sit silent and unmoving in a vigil that lasts until dawn.

It is freezing cold on this cliffside at 1 o'clock in the morning. But warmth aplenty can be had along the noisy row of food stalls and souvenir stands stretching down the steep hill to the dock where launches wait to go back to the mainland. (Halfway down the hill is a men's room. It costs two pesos to get in, and people look in at you through the open windows.)

"Zanahorias," the Spanish word for "carrots," is difficult for a Norteamericano. Conversely, "carrots" is difficult for Pedro Lucas.

Lucas is the factotum at William Gray's shop. He was born 51 years ago in the Tarascan village of Ijuatzio and has been in Patzcuaro 22 years, almost all in employment wit the Grays. He and his wife Anita, are the parents of three daughters and two sons. The sons, Marcelino and Rafael, work in the Grays' furniture factory.

Depending on the time of day, you will find Lucas sweeping the front sidewalk, pruning ivy on the wall behind the gate, writing a bill of sale for a customer, receiving merchandise from native craftsmen, pulling weeds from the cobblestone driveway, answering the telephone, unlocking the art gallery for a prospective buyer, chiseling a design in a wooden planter. Lucas also is the man who brings the plumber to fix the water heater in our apartment.

Lucas doesn't speak English. It doesn't matter. He communicates because he is patient with people who don't speak Spanish. He lets me try, and finally I communicate, too.

Patzcuaro is like that.