Saaremaa has one town and a great deal of countryside, so where you sleep decides how much you drive — and a large share of the island shuts for winter.
Kuressaare — the only real town
The island's single town, built around the castle at Lossihoov: hotels and spa hotels, the restaurants, the tourist office at Tallinna 2, and the bus connections. If you are here without a car, this is the only base that actually works.
Mändjala and Nasva — the pine coast west of town
Ten to fifteen minutes' drive along the south coast from Kuressaare: campsites, holiday houses and shallow sandy beach backed by pine. Cheaper than the town and better for families, but you will drive for every meal.
Muhu — the island before the island
Muhu sits between the ferry and Saaremaa proper, joined to it by a causeway. Staying here puts you closest to the mainland crossing and in the quietest landscape of the three, at the cost of the better part of an hour's drive to Kuressaare and back.
Practical: book the ferry, not just the room
Cars cross on the Virtsu–Kuivastu ferry and sailings sell out on summer weekends and around public holidays; foot passengers and cyclists do not need to book. Reserve the crossing when you reserve the room, and check what time the last sailing leaves.