The Marker Hotel is one of my favorites. It's location is hard to beat, right on the pier and next to awesome bars.
There are plenty of other options, AirBnB, tiny houses community and great RV camping sites
Fun
Go deep Sea fishing or just have fun time in the ocean, take a tour to Isla Tortuga or sunset tour.
Have a drink and see fishermen returning from work, taste the most fresh fish ever.
There is always a line for pictures but come early so you get a good sunlight for the picture
Make sure it is fresh, some things are still prepared from frozen. no need for fancy plating.
Duval street is filled with shops and bars, you will feel party vibe all around.
Whatever you decide to do Key west offers a perfect atmosphere. From relaxing poolside to bar hopping and deep sea adventures.