Queen street is the main drag in Niagara-on-the-Lake. There are many interesting shops and unique buildings. It's a great place to wander around and kill a couple hours. Also, since Niagara-on-the-Lake is... on a lake, you can walk just a couple blocks east to see the river opening into Lake Ontario at Queen's Royal Park. Take a look through the below link for a general overview of things to do in Niagara-on-the-Lake.
Niagara Falls is only about 20 minutes from Niagara-on-the-Lake. On the Canadian side, you can view the Falls, walk down Clifton Hill (which is almost like a carnival with all the attractions they have). On the U.S. side, there are various walking trails to view the Falls from different angles. Rainbow Bridge is the border crossing that connects the two sides. If you're feeling adventurous, you can also take a boat into the heart of the Falls and experience them up close. Adam and I did this a couple years ago and it was unforgettable!
The Niagara region is well known for its' beautiful wineries. And there are so many of them! A popular thing to do is to go on a biking tour of the wineries, tasting different wines along the way. Linked below is one of these tours, but there are many available.