Yes, Luke knew of Mos Eisley, but Obi-Wan felt the need to remind him how dangerous it was.
It's important to remember that - especially in the eyes of Obi-Wan Kenobi - Luke was a very inexperienced youth with a penchant for getting himself in trouble. Luke has led a very isolated life on the Tatooine equivalent of a small rural farm. Also, settlements on Tatooine tended to be very, very small due to the climate & rough conditions. Life on Tatooine was very similar to that of the early pioneers heading west back in the Old West of 1850's America.
The Tosche Station mentioned by Luke is nothing more than a run-down little bar/garage consisting of two buildings on the surface. Underneath the buildings (Tatooine settlements tended to be at least half underground because of the heat), there was a garage large enough to hold a few speeders and something the size of Luke's T-16 Skyhopper. There was also a small restaraunt/bar and a few rooms that you could rent like a motel. Tosche Station basically acted as a waypoint for the numerous people living out on the edges of the Jundland Wastes. Think of it as the "general store" from an Old West town - a place where you go pick up the mail, get that part you ordered, buy supplies, etc.

The next largest place is Anchorhead, which is roughly equivalent to a very small town - a point where you can "catch the bus" to the city (which is exactly what Luke had offered to Obi-Wan).

Mos Eisley - in comparison - would be a huge city, like the Tatooine equivalent of New York City.

Even IF Luke had been there before (he had been there at least once in the Legends continuity), it's still likely that he would vastly underestimate the kind of trouble they might find there. Luke's idea of trouble would be more like, "Hey - remember the time that swoop-racer got drunk at Tosche Station's bar and started a fight with a Jawa?". A hilarious example, yes, but it illustrates the difference. A drunk fighting a Jawa and wrecking the place wouldn't even earn a batted eye in Mos Eisley, whereas in Tosche Station they'd be talking about it for months if not years later.
Kenobi, on the other hand, understands how dangerous it can be and is simply reminding Luke to be careful while they're in the spaceport. The fact that the Empire has a garrison there is completely irrelevant, as well - the city itself offers far more danger than just a few stormtroopers.
As for why they're overlooking Mos Eisley from a cliff, the most likely explanation is that Obi-Wan wanted to check out the city from a distance just to make sure nothing was obviously wrong - like an Imperial Star Destroyer hovering over it, for instance - before they got any closer. He then took the opportunity to warn Luke... a warning which apparently fell on deaf ears since Luke got into trouble not five minutes after they arrived.