On the forth of July Newport RI is out of control. The best spot to go during the day is Atlantic Beach Club. This place is on the beach and you are able to play volleyball and also enjoy the music from the bar. The drinks are pricey, but I always have a good time. There is always a cover band and if you get hot you can always jump in the ocean to cool off.
At night there are plenty of good spots to see the fireworks and have a good time. There is Vincent's on the Pier they have a dance floor inside and plenty of seating area outside, H20 has very good food, but there is no sitting area outside to watch the fireworks, just one big dock that many people lean against the railing, or maybe get lucky and get invited on board a yacht to watch the fireworks. There are many yachts parked at bars and restaurants in Newport. Dockside or Riptide is another place to hangout and watch the fireworks and see some massive yachts.
Everyone should experience the Forth of July in Newport RI at least once.