Our hostel is tucked away on a residential side street of Sandy Bay.  The most touristic parts of the island are West End, which is about a 7 min bus ride ($1) away, and West Bay, which is about a 15 min drive away.  Why stay in Sandy Bay?  What's there to do?
I love getting a feel for where I'm traveling, getting a little slice of what life is like there, and that's much easier to do if you're staying where the locals live.  I remember one New Year's, and a bunch of guests from the hostel went across the street to my neighbours' place, where they were butchering a pig and doing a hog fry- authentic experiences is one of the great parts of staying in Sandy Bay. On cruise ship days, you won't even notice that they're here if you're in Sandy Bay.
If you're a diver (or would like to learn how), there are several dive shops in Sandy Bay, including a couple that offer special pricing for hostel guests.  Octopus Dive School also has paddleboard and kayak rentals.
Like nature?  The Carambola Botanical Gardens is just a few minute walk away.
If you'd like to swim with the dolphins, Anthony's Key Resort is also located in Sandy Bay, about a 5 min walk from the hostel.
Snorkeling?  The Sandy Bay beach is a 3 min walk away, and there's exceptional snorkeling about a 200 meter swim from shore.
Cheap eats are another great thing about Sandy Bay.  There are several local eateries that are very inexpensive.  They don't look too elegant (more like someone's kitchen than a restaurant), but the food is good, the portions are big, and most of the options will cost you under $5. If you want a fancier place, there are a few of those too- Blue Bahia Beach Grill, Frangipani at Mayoka, and Tranquil Seas are all in Sandy Bay.
If you're interested in doing volunteer work, Sandy Bay is the perfect base, as there are several non-profits here.
Of course, my favourite part of Sandy Bay is the hostel.  Always fun people around, plus there's the pool, patio, and lizard lounge.  For a night out on the town, I'll head in to West End.  For a beach day, I'll go over to West Bay. For groceries, I'll make my way to Coxen Hole.  But for days of relaxing, diving, snorkeling, and enjoying the people and the culture of the island, Sandy Bay is where I'll stay :)

Most of our hostel guests are adults (but many are kids at heart!), but we also have traveling families.  Roatan is a great spot for children, and the hostel has several private options that work out wonderfully if you're traveling with your kids and need a bit of space to yourself, but love the warm, friendly atmosphere of a hostel.  What's there to do in Roatan with kids? Here's a list of my favourite choices, sorted by age range.
All ages, including young children (under 8)
1. The beach: it's a giant sandbox, what could be more fun!  West Bay is a great choice to spend some beachtime, with its white sand and clear, turquoise water.  If you didn't bring along beach toys (they can be a little hard to travel with), Eldon's supermarket in Coxen Hole usually has some.
2. Glass bottom boat: see the reef without getting wet!  If your children aren't comfortable in the water or can't get used to wearing a mask, the glass bottom boat is a great way for them to see what's under the water.  I've taken my kids a few times when they were small, and we saw turtles, tons of fish, and the reef.
3. Gumbalimba Park: monkeys and more.  There's a canopy tour/ zipline (kids as young as 4 can go strapped to a guide), or if they're too young or not interested in that, just check out the park part, which has a bug display, pirate cave, swinging bridge, monkeys and parrots.
4. Dolphins at Anthony's Key Resort.  There are varying points of view on dolphins in captivity- these dolphins are in a netted enclosure off the beach of a cay, with a few well-trained ones that leave the enclosure to follow the boat out when there's a dive with the dolphins offered.  If you opt to visit the dolphins, you could just watch the show, or sign up for a dolphin encounter in waist deep water.  Older kids also have the option of a dolphin swim/snorkel, or an action swim.  These are activities that take place inside of the enclosure.
5. Iguana farm: check out the prehistoric-looking reptiles.  This is a spot where iguanas are protected (people eat iguana on the island, so their numbers have been greatly reduced).  You can get up close and feed them lettuce leaves- some of the iguanas are several feet in length.
6. Maya Key: a chance for a history lesson, as well as seeing animals.  This key, which is a short boat ride from Coxen Hole, has a replica of the Mayan ruins of Copan with historical information given, as well as sea lions, sting rays, nurse sharks and a few land creatures too, like ocelots and monkeys.  There's also a pool and beach.
7. Horseback riding.  Barrio Dorcas, just outside of West End, offers horseback riding.
For slightly older kids:
8. Snorkeling.  There's great snorkeling several places on the island.  If your child is old enough to swim a fair distance, the reef in Sandy Bay is spectacular, it's about a 200 meter swim out (when my kids were young, I'd tow them out with a float, let them snorkel, and then give them a ride back in).  In West Bay, the snorkeling is super-close to shore.
9. Scuba diving.  At age 8, kids can do a Bubblemaker experience in the pool or confined water up to 6 feet in depth.  Age 10 and up, kids can do a junior open water course.  If your kids are interested in learning more about marine life, stop by Tranquil Seas on Mon nights at 6 for the marine life presentation given by Mickey Charteris, it's fantastic.
10. Lion-fish spearing.  A permit needs to be obtained from the marine park, which includes a short course (a couple of hours).  My older son got his at age 10, and loves to go out snorkeling and spearing lionfish.
11. Para sailing. The boys and I went up para sailing several years ago- we were pretty scared, but it was fun.
12. Touring the island.  It's about a 1 1/2 hour drive to get to the far east side of the island.  The kids might fall asleep along the way (much better than hearing 'are we there yet?'), but it's fun to see this side, with the spectacular views along the drive.  Check out the beach at Camp Bay, the picturesque town of Oakridge with the houses on stilts over the water (you can stop here and do a boat tour through the mangroves), a beach stop at Parrot Tree Plantation, take out a kayak, maybe a stop at Fantasy Island to see their animals.
13. Fishing.  Many kids love fishing, so work out a price with one of the locals to head out on a boat for a bit of snorkeling and fishing.
14. Fire dancers and crab races.  Every Sunday starting around 5 at Bananarama in West Bay, lots of fun.
15. Paddle boarding.  You can rent them in West End, West Bay, and there are also a few at Octopus Divers in Sandy Bay.
16. Local events.  If you're here mid-September, check out the school kids marching for Independence Day, and see the fishing tournament in West End.  At Christmas, scout out where Santa will be visiting (usually West Bay mall).  Fireworks are several times of year.  Fundraising events such as music concerts are sometimes held for local non-profits.  Unfortunately, there's not a really great calendar anywhere that I could find online to help you out with this, so just ask us what's going on.
17. Pool time.  With my kids, one of their favourite places to be is the pool, even when there's a beach nearby.  There is a pool at the hostel, so enjoy!
18. Check out a local school.  It's interesting to see how other schools run.  Bring along donations of school supplies (they're always needed), and ask if you can participate, maybe in reading a book to a class during English.
19. Learn how to play the steel pans.  http://www.steelpanalley.org/
20. Climb a coconut tree, catch a few land crabs, chase some chickens, dance in the rain, jump off a dock- enjoy all the simple pleasures of Roatan the way the kids here do.  

We have a few guests that just come to Roatan and then head home, but many more who make Roatan a part of a longer journey through Central (and sometimes South) America.  If you're working your way through Central America, how do you get to Roatan?
Flights: There's now a direct flight to Roatan from Belize with TropicAir.  The flight connects onwards from Belize City to Mexico, so if you're looking to cut back on the amount of bus travel you have to do, this is a good option.  Email me for a promo code to use when booking the flight to save 10%.
There's also a flight from San Salvador to Roatan every day with Avianca.  It generally is a bit pricier, but sometimes there are specials, so it's worth checking.
A flight has now started between Havana, Cuba and Roatan.
There are also domestic flights over from La Ceiba, San Pedro Sula, Tegucigalpa, and a new service starting from Copan.

Bus/ferry: For those taking the slower journey and trying to stretch their cash as much as possible, this means going overland with a combination of buses and boats.  From Belize, there's a direct boat from Placencia to Puerto Cortes, Honduras every Friday (and Puerto Cortes to Placencia every Monday).  If that doesn't work out with your timing, you can take the bus as far as Punta Gorda, Belize, and then take a boat from there to Puerto Barrios, Guatemala (this is also the route if coming from Rio Dulce, Guatemala), then a bus to the border, crossin over near Omoa.  For either of these routes, you'd then continue on to San Pedro Sula, switch buses at the main bus terminal (which is a pretty safe-feeling, well-lit, busy place), continuing on to La Ceiba, and taking the ferry over from there.  The ferry leaves La Ceiba twice a day, with the afternoon one leaving at 4:30 (morning ferry is at 9am), so it's possible that you might end up having to spend the night in La Ceiba.  If you do, you might want to actually see something, and check out Pico Bonito national park or whitewater rafting on the Rio Cangrejal (take a look on the internet for Omega Tours or Jungle River tours if that's of interest).
If you're coming from Antigua, Guatemala, there are shuttles between there and Copan, Honduras.  From Copan, you can get to La Ceiba in one day by bus (about 7 hours of bus travel, changing buses in San Pedro Sula), in time for the afternoon ferry if you get going early.  If you're coming from Guatemala City, there's a direct international bus service with Hedman Alas to San Pedro Sula.
From El Salvador, the King Quality bus lines has a direct international service to San Pedro Sula.
Heading to/from Nicaragua?  You can either catch an international bus to San Pedro Sula or Tegucigalpa and a bus from there to La Ceiba, or there's a shuttle bus with Tornabe from Leon, Nicaragua straight through to La Ceiba.

Bus travel on the mainland of Honduras sometimes makes people wary, as there have been stories of hold-ups on buses.  There are several bus lines in the country.  The cheaper ones cost around $5 (might be a bit more than that now, it's been awhile since I've taken one) to travel between San Pedro Sula and La Ceiba, and take about 3 1/2 hours or so.  They're fairly comfortable if you get on early enough to get a seat, and don't have many stops, but they don't take the same security measures as Hedman Alas.  Hedman Alas offers a higher end coach service (a/c, drink, snack, movie), and costs about $20- they also have a bus that goes to the airport in San Pedro Sula, so if you're flying into San Pedro Sula and then busing from there, that's a good option.

The other place that many travelers are coming from is the neighbouring island of Utila.  From Utila to Roatan, it's possible to get a flight, but pricey (around $100).  You can also take the ferry to the mainland and connect to the ferry to Roatan from there, or you can come over on a direct boat between the two islands.  These boats don't run on a super-set schedule, but they do go several times a week, and the cost is about the same as taking the two ferries (about $55).  To try to find a boat that's going, you can go on the Facebook group 'Utila buy and sell', and post the day you're looking to go.

Checking out all the different types of currencies is one of the interesting parts of travel, but can also be the most aggravating.  Trying to convert in your head and not end up leaving a country with a ton of currency that you can't exchange anywhere later on can bring on a headache!
Honduran money is actually pretty easy, because the exchange rate is close to 20 to the US$.  The current rate is actually almost 22 (when I first came to Honduras in 1998, I think it was about 11 lemp to the dollar, and kept falling until it was held at 18.9 for several years, and then started dropping again when it was allowed to fluctuate), but by thinking of it at 20, it's an easier calculation.  Just slide the decimal one place, and divide by 2 to get a rough approximation of the US$ value.   The currency is called lempira, or 'lemp' for short.  50 lemp?  Slide the decimal, 5, divide by 2 is 2.5, so 50 lemp is about $2.50  
Honduran bills come in the following denominations: 1, 2, 5, 10, 20, 100 and 500, so the largest bill is a value of about $25.  500 lemp bills are very difficult to break: most small shops and taxi drivers don't have change on them for this, so make sure you keep smaller change handy for transportation.  
Coins in Honduras do exist, but almost no place uses them (when you consider that the smallest bill, the 1 lemp note, is less than 5 cents, there's no items that cost less than that, and grocery stores usually just round the figure).  If you like to collect coins, the banks have them.  Coins are called centavos, and there are 5 centavo, 10 centavo, 20 centavo and 50 centavo coins.
On Roatan, US dollars are widely accepted, so as long as you have small US$ bills, it's not necessary to get them exchanged.  When paying in US, sometimes your change will be given in US, but often will be given in lempira.  Banks are very picky about the acceptable condition of US bills, and therefore all stores/businesses are picky too.  Bills cannot have any small tears in them or any small piece ripped off, and sometimes won't be accepted if they've been written on.
ATMS on the island mainly dispense in lempira, but there are also several ATMs (including the one at the airport and the one by Coconut Tree in West End) that also have the option of withdrawing in US$, which is handy if you'll be traveling on to another country and want to make sure you have some US currency.  Land border crossings have money changers to exchange lempiras to whatever the neighbouring country's currency is, as do airports if you're taking a flight to your next country, but many times at the banks themselves in neighbouring countries, lempiras cannot be exchanged.