A town on the Lago Llanquihue's shoreline where you can get amazing views, subject to the weather, of Volcans Osorno and Calbuco.
There isn't much to see and do in the town. Iglesia del Sagrada Corazon, perched on a top of a hill from Calle San Fransisco, overlooks down to the town, the lake and towards the volcanoes. The church is modelled on the Germany's Marienkirche in the Black Forest. There are beaches on the shoreline of Lago Llanquihue where you can relax by the lake.
One or two days would suffice visiting Puerto Varas and spend more time exploring Parque Nacional Vicente Perez Rosales nearby.