There is an "empanaderia" in Pisac market. We bought cheese and chicken empanadas. Both selections were quite tasty. It's a quick order to-go type of place and so you can bring it with you and eat it on the way if time is limited.
Favorite Dish: various selection of empanadas
Semani Wasi Restaurant has the best trout I have ever had in my life. The restaurant is located on the end of the market with the produce. It houses a hostel as well and you basically eat in the courtyard of the hostel which is quite nice. The owner must have a fondness for birds because there are many in cages around the courtyard. Also you will have to share some of the scraps of your meal with the resident cat and her kittens.
Favorite Dish: Fried Trout
You will find many street vendors selling bolied corn. It is delicious and sooo big! And so cheap, just 40 cents for each. You can have it with or without cheese.
I tried the plain one, and I highly reccomend it, so fresh and warm...
Apart from wandering around the market stalls, one of my best experiences there was sitting at a terrace by the main square and watching the people go by. I did so because I wanted to paint some watercolors and this was a perfect observation place.
Favorite Dish: I had a coca leaf tea, recommended for altitude sickness.
Around the central market square you will find many street vendors selling local food. Is cheap and delicious and you see them cooking it right there. Forget your prejudices and sit with the locals, point at what smells best and go for it!
PS.: Speaking some spanish helps in understanding basically what are you eating :-)))
In the Pisac market, before you get to the main square, there is this courtyard with a huge stove which they serve cuy (guinea pig) from. I didn't have time to try it.