Pirate bar
(http://www.pirate.gr) at the far right side of the port. during the day it operates as a cafe offering a variety of coffees and snacks including fresh salads, brushcettas, sandwiches and a small selection of main courses and desserts. the homemade gnocchi with bacon and sage and fresh lemon cheesecake are just heavenly. free wifi.
Psaropoula
Unassuming little harbourside eatery that offers fresh seafood in a glass case for those who can afford it, and pretty good home-style Greek grub for the rest of us. Avoid the set menus, instead try the excellent moussaka.
Kondylenia
Kondylenia has lovely, breezy views of the Saronic Gulf and Peloponnese. Sunsets are fabulous, the food is excellent, and the staff are wonderful. Open year round, but with a limited menu in winter.
Pirofani
Nestled in Kamini valley, Theo's been serving a delicious alternative to traditional Greek food in an outdoor taverna-style atmosphere for nearly 15 years. Open from Easter until mid-October.
Hydra offers many restaurants. Most prominently feature seafood, but little asterisks in the menu note that pretty much all of it is actually imported frozen from far away. Only a few restaurants offer local fish, and they charge accordingly.
To Kryfo Limani
Small taverna with an interior open courtyard with very good, somewhat innovative traditional Greek dishes.
Xeri Elia Douskos Taverna
This taverna seems to have three names: "Douskos," "Xeri Elia," and the English translation of the latter, "The Dry Olive." The food is traditional standard taverna fare, and prices are reasonable for Hydra, but the restaurant's real attraction is the huge, shaded outdoor square where most of the tables are located, making it a pleasant and atmospheric place for a leisurely lunch, when it is usually fairly quiet. In the evenings it's more lively and crowded. Many evenings in season there is live Greek music, usually played by an ensemble of the sort which is often described as making up in enthusiasm what they lack in polish.
For a more local experience, head down to Kamini, which has a few distinctly unhip tavernas populated mostly by grizzled Hydriots.