In certi quartieri ci si conosce tutti e ci si saluta per strada.

Here ci si is a standard Italian pattern used to express a general, impersonal idea with a reflexive/reciprocal verb.

So:

• ci si conosce = people know each other
• ci si saluta = people greet each other

A good natural English rendering is not word-for-word, but something like:

• people know one another
• everyone knows everyone else
• people greet each other

Not in this sentence.

Here ci is not the locative there, and it does not mean us. It appears because Italian combines:

• si impersonale = the impersonal si, meaning people / one / you in general
• with a verb used reflexively or reciprocally, like conoscersi or salutarsi

When those two come together, Italian normally uses ci si.

So in this sentence:

• ci = the reflexive/reciprocal part
• si = the impersonal part

Because Italian normally avoids si si in this structure.

When a verb already has a reflexive/reciprocal si, and you also want the impersonal si, the first si usually changes to ci:

• lavarsi → ci si lava
• divertirsi → ci si diverte
• conoscersi → ci si conosce

So ci si conosce is the standard form, not si si conosce.

It is impersonal, not passive.

That matters because learners often see si and wonder whether it means a passive construction.

Here the meaning is:

• people know each other
• people greet each other

It is not:

• are known
• are greeted

A useful clue is that the sentence is describing a general social habit in certain neighborhoods, not turning an object into the subject of a passive sentence.

Because with si impersonale, the verb is usually in the third person singular.

So even though the idea involves many people, Italian says:

• ci si conosce
• ci si saluta

not:

• ci si conoscono
• ci si salutano

That is normal. The sentence is built around an impersonal people/one/you in general idea, and that regularly takes the singular form.

Here tutti adds the idea of all of them / everyone.

So ci si conosce tutti means something like:

• everyone knows everyone else
• people all know one another

It is reinforcing the idea that the people in those neighborhoods are all mutually acquainted.

So the sentence does not mean that someone knows everybody in the world. It means that, within those neighborhoods, the residents all know each other.

Usually, for this kind of impersonal reciprocal meaning, Italian prefers ci si conosce tutti.

Without ci, si conoscono tutti can be unclear or can suggest a different structure depending on context.

For example:

• Tutti si conoscono = Everyone knows each other
• Ci si conosce tutti = People all know each other / everyone knows everyone else

So if you want the same impersonal, general pattern as the original sentence, ci si conosce is the safer and more standard choice.

Because both parts need the same construction:

• ci si conosce
• ci si saluta

Each verb is being used with the same impersonal/reciprocal meaning, so Italian normally repeats the structure.

That repetition sounds natural and clear:

• In certi quartieri ci si conosce tutti e ci si saluta per strada.

It means certain neighborhoods or more naturally some neighborhoods.

Here certi does not usually mean that the speaker has specific named neighborhoods in mind and is hiding their names. Very often it simply introduces a general category:

• in some neighborhoods
• in certain kinds of neighborhoods

So the sentence is making a broad observation about places where community ties are strong.

Per strada is an idiomatic expression meaning:

• on the street
• out in the street
• when they run into each other in the street

So ci si saluta per strada means people greet each other when they meet outside, in everyday public life.

It is not a literal idea of moving through the road. It is just a very natural Italian way to say out on the street.

Yes. That is also a correct and natural sentence.

It means roughly the same thing, but the feel is a little different:

• ci si conosce / ci si saluta = more impersonal/general
• tutti si conoscono / si salutano = more directly centered on everyone

So:

• In certi quartieri ci si conosce tutti... = in some neighborhoods, people all know each other...
• In certi quartieri tutti si conoscono... = in some neighborhoods, everyone knows each other...

Both work; the original is just using a very common impersonal pattern.

Yes. It is completely standard and quite common.

It may feel advanced to an English speaker because English does not have a direct equivalent, but Italians use this pattern naturally with general statements such as:

• ci si diverte = people have fun / you have fun
• ci si incontra spesso = people meet often
• ci si aiuta = people help each other

So the structure in your sentence is not unusual or literary; it is normal Italian grammar.