There are 2 types of local buses in Sri Lanka: very old with all windows open that are usually packed, and smaller newer airconditioned that are a little more expensive. Better buses don't run on some of the routes though. If you want to have local experience then take a bus or tuk-tuk, otherwise just use a taxi. I wouldn't recommend renting a car as traffic is crazy, tuk-tuks go between the lanes and drivers talk to each other using their special honking language.
It took us approximately 6 hours to get to Kandy having to change 2 buses. Since we arrived in the evening we searched for a hotel in the area first. In most of the places you don't need to reserve anything in advance, you can get a room for 10-20 USD per night. We took the first room close to the train station as we wanted to catch a morning train and went for some food. These are some pictures on our way. Kandy didn't look much different from Kalpitiya, it was bigger and louder.
Because of all the traffic, old buses and cars, the roads are very dirty and it's very hard to breath. Here is an example of what you'll experience in Kandy: