Time Out says
Positioned as it is on the southern head of Sydney Harbour's entrance, Watsons Bay is literally the first place Captain Cook would have dropped anchor as he sailed into the harbour. As Sydney's oldest fishing village (since 1877), this picturesque suburb is drenched in history, and one of its notable must-sees is the South Head Heritage Trail, a scenic bushwalk dotted with historical remnants such as a disused cannon and rifle wall.
Slow down and take it all in when visiting this eastern suburb – it's one of Sydney's top spots for picnics, long lunches, park sprawling, sunbathing (Lady Jane Beach is a legal nudist spot, if you're so inclined) and trail walking. Make sure you leave some time to partake in some fish and chips by the water, an essential Watsons Bay pastime whether it's fancy and on a plate at Doyle's, or wrapped in paper and dripping vinegar on the sand at Camp Cove Beach.
As far off as Watsons may seem, travelling there is relatively easy. Plus, it's a journey that's massively enjoyable in itself, with one of the most pleasant ferry rides this city has to offer. Ride from Circular Quay and pass a few picture-perfect bays along the way, or take advantage of the latest addition to Sydney Ferries' route map and visit Watsons from the north, departing from the legendary beach hub of Manly.
Shake off the sand and embark on a trail walk to South Head Lookout. There you'll be dwarfed by the Hornby Lighthouse, perched atop the 'The Gap', a dramatic cliff point with a sheer drop to the crashing Pacific waves below. And be sure to visit Robertson and Gap Parks along the way – they're both dreamy spots for sprawling out on a blanket and getting lost in a book, or hosting a picnic with friends and what's arguably the best view in a town that's spoiled with them.