Things are kind of spread out across the island.

Santo Domingo has the biggest beach and is closest to Ojo de Agua, but there are other beaches at Charco Verde and La Punta Jesús Maria.

Merida is closest to the San Ramon waterfall and kayaking the Rio Istiam. Balgüe/Santa Cruz are great starting points for hiking Maderas. Moyogalpa (the main port town) is the best place to stay to hike Concepcion.

It also has a Pali grocery store (and other stores) and the only ATMs on the island. It’s the closest to La Punta, too.

Just to give a bit of distance perspective:Moyogalpa to Ojo de Agua: approx 24km. Moyogalpa to Balgüe: 32kmSo, you will have to figure out a way to get around to see the things on the island and there isn’t really a “perfect” place to stay to see everything.

My recommendation is to pick a place to stay that appeals to you, regardless of location, and you can figure out your time on Ometepe from there.