Nazaré splits into three areas. Sítio sits on the clifftop with sea views and quick lighthouse access — it has almost no hotels, but plenty of apartments and guesthouses. Praia is the seafront district packed with restaurants and the town beach, and this is where the vast majority of Nazaré's hotels actually are. Pederneira is the original old town up the hill — quiet and authentic, but mostly condos and private holiday rentals rather than hotels.
If you're chasing big waves, being able to walk to the lighthouse is the dream. Sítio has only a couple of hotels, but its apartments are the best way to stay up there; otherwise base yourself in Praia and drive or taxi the 10 minutes to the headland.