My family and I vacationed Pescadero and Todos Santos for many years. It's changed dramatically in the past 15 years and continues to grow rapidly. Here are some of the places we enjoyed. There are a few places I wish I could share that don't have names but our rule (that never steered us wrong) was go to the taco spots where you see a lot of locals eating lunch.
Carnitas Miguel - If you like cereal for breakfast, this place might not be for you. But if you're into perfectly simple, hand-made gorditas for breakfast you MUST go here. There's another carnitas place nearby but make sure you go to Miguel's. The gorditas are my go-to; I order two or three if really hungry. Their tortillas are also hand made if you want to go the taco route. P.S. they come out super hot, dont burn your tongue on the first bite.
Baja Beans - this is a great coffee and breakfast spot (though a bit pricier since it's a gringo spot). Quiches are always fantastic and you can ask for them to be warmed up. On Sundays, they have a locals market with crafts, clothing, and some produce.
Cafelix - Great frappes, reliable internet. They now have two locations; one in Todos and one in Pescadero
Tesoras del Mar - Best ceviche ever. Pair it with a margarita and you will understand pure bliss. The side of the shop is also a "fish market" with the days catch.
Hierbabuena - On the way to the dining area, you'll walk through an amazing garden which is where many of the herbs and vegetables they use are grown. The menu changes regularly based on what is in season. This place is definitely priced for Americans (and last time I went they only accepted cash) but is worth it for the experience and freshness.
Todos santos brewing - This was a new spot the last time I visted but it had good beer and good fries.
Hotel California - Thanksgiving dinner here is always fantastic. They serve traditional American Thanksgiving dishes with sometimes a little twist (but don't worry, its mostly traditional). Their gift shop is different from the other shops downtown and they're tequila is worth a try.
...and how can you not live it up at the maybe(maybe not) hotel referenced by the Eagles.
Art galleries - Many artists have galleries in and around Todos Santos. Spend an afternoon walking around and exploring them between all of the shops. AR Galeria is our favorite.
Sealion hike at Punto Lobos - Between Pescadero and Todos there's a turn off that will take you to Punto Lobos and a controversially built hotel. There's a trail that leads up and over the hill where you can almost always see (you'll often hear them before you see them) sealions. It may have changed, but we always parked by the stone remanants of a building (old turtle cannery) and the trail starts right behind that. It's best to do this hike in the morning before it is too hot; itll take ~1.5-2 hours round trip.
The cutoff to see the sealions is at the switchback turn as you begin going downhill (a thin trail rather than the gravel road you've been taking up to this point).
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La Paz - About an hour away, La Paz offers excursions such as snorkling with sea lions, kayaking, and swimming with whale sharks. These are all a blast! We went through BOA and always had a good time with them. For food, go to Rancho Viejo, get a kilo (or more) of arracherra and a jarra margarita (honestly, can't recommend this place and combo enough).