There is very frequent minibus service from Puerto Montt, as well as regular bus service from other cities. Tur-bus offers overnight service from Santiago for a very reasonable price. Semi-cama seats lean back halfway, cama even more. Snack and breakfast included for a small fee. The nearest airport is El Tepual (IATA:PMC) in Puerto Montt, about 30 km. from Puerto Varas, which has regular flights to Santiago, Punta Arenas, Balmaceda and other airports sereved by LAN Airlines, Sky Airline and Aerolineas del Sur. There is also a railroad station in Puerto Varas with daily trains running north to Victoria and other cities 13 other cities in between, as well as Puerto Montt to the south. There is also an additional daily train between Osorno and Puerto Montt. You can also take the Lake Crossing from Bariloche, Argentina.
There are many options of day trips and adventures available from Puerto Varas. The Vicente Perez Rosales National Park, including the Petrohue falls and Lake Todos los Santos, is about 70 km. from Puerto Varas. Osorno and Calbuco volcanoes are nearby. Mt. Osorno has a road to the base of a chairlift which is open all year round, for skiing in winter and sightseeing in summer. There are also good nearby destinations for trekking, flyfishing, rafting, kayaking and other adventures nearby.
A good start to find a place to sleep is the sernatur office they have prices.
The big bus companies are also here. Eg Tur-Bus.
or you can take a local bus to Puerto Montt.
Close to this city are the waterfalls of Petrohue, take the bus to Ensenada, some of them continue via Parque Nacional Vicente Perez Rosales until to Lago todo los Santos from where you could take a boat. Or walk back for about 6km to visit the waterfalls. (in January there are annoying but harmless insects in that parque)
Another place to visit is the small city Frutillar; it has a museum of the first colonists in that area. (the city has to parts the part close to the lake is for most visitors