To get to Lagos from Faro – to where many fly in from all over Europe - you take the A22 and it's about 1 hour drive (rather fast). You also can take the 125 west, the older road, that takes you through about half of the western Algarve. The 125 brings you closer to some of the interesting towns and villages of the Western Algarve. These include Albufeira, Carvoeiro, Ferragudo, Porches – with the famous Porches Pottery -, Alvor,Praia da Rocha, and then Lagos.
From Sagres (pronounced Sagresh) almost the most Western point in the Algarve you take the the 125 east and drive through Salema, Burgau and Luz (pronounced Loosh). These small towns are beach communities the are undergoing massive construction to house retirees from the UK and Germany and to a lesser extent from the rest of Europe. English is very common although the number of Americans is small. The drive takes about 30 minutes at reasonable speed.
The nearest Airport is Faro(FAO) , about 75km from Lagos.
To get to Lagos from Lisbon, you could take train or bus. To take the train, you could buy the intercity ticket, leave from Entrecampos station in Lisbon, get off in Tunes, a few stops before Faro and then change to the regional train to Lagos. The schedules are timed so that you only have to wait a few minutes. Make sure to check the strike schedule (which could happens more comonly in regional train from Tune to Lagos). To take the bus, there are 2 bus companies, EVA and Rete Expresso, run several time every days from Lisbon to Lagos and other cities in Algarve and vice versa. The trip Lisbon - Lagos is about 4 hour, very nice and comfortable pullman and you do not have to change the bus on the way. You can buy ticket online from these companies' website or in Oriente bus station or Sete Rios bus station where the buses leave.(They have separate bustation next to the public bus station in Sete Rios so make sure you do not confuse the stations!). Roundtrip bus ticket costs 36 euros (EVA) or 35 euros (Rete Expresso) with discount for students , junior and old aged people.
Lagos is a small city;you can pretty much walk everywhere. There is a bus and a train station to take you to other cities(Silves,Faro) and taxis are abundant. Walk to the beautiful sandy golden beaches.
There is a great variety of things to see; The city center is sculped with traditional architecture and colors from the region. Beaches vary in shape and style from long sandy beaches to almost private ones hidden by cliffs. Ponta da Piedade is a beautiful spot with a nice lighthouse from where you can make boat tours to the natural caves. The harbour in the morning is full of activity, if you like to wake up early don't miss it. Also the fish market is an interesting spot.
Lagos has things to do for just about anyone, from the relaxing beaches to the exciting dolphin tours.
There is the Praia da Batata in Lagos (right across the main road) which is an absolutely beautiful location. Walking along Estr. da Ponta da Piedade a few hundred meters before the lighthouse, (after passing a café and Camila beach on your left), find a concrete fencepost on your right decorated with a spray painted eye, mouth, and two teeth. Enter the path it marks, which will take you to the edge of the cliff. A bit north (to your right) there is a cove accessible only by boat or by a rather narrow hidden mud slope with a rope pegged to the top. There are a number of beautiful, although perhaps dangerous, walks along the top of the cliffs. Another fantastic beach is Meia Praia, just the other side of the Marina, it's a huge beach with a variety of beach bars to cool off in, and widely renowned as on of the best beaches in the AlgarveLagos was chosen among 500 European destinations by the QualityCoast International Certification Program of the European Coastal & Marine Union as one of the most attractive tourist destinations for visitors interested in cultural heritage, environment and sustainability. As acknowledgement for the outstanding approach towards a sustainable policy, planning, control and enforcement-system Lagos has been awarded the QualityCoast Policy Gold in 2012.< 
One of the more popular events in Lagos are the Dolphin Tours, with 3 different companies offering tours to see dolphins. Whilst you might be unlucky and not see a dolphin, it's still worth it if you've ever wanted a ride on a high powered boat. All 3 of the companies are based in the Lagos Marina.
You can go on a motorbike and sidecar tour with Sidecar Experience; a breathtaking way to take in the wonderful scenery of South West Portugal. Tours leave from just outside the Lagos Marina office, just in front of the footbridge.
There's also a company within Lagos which offers rentals of buggies, for a more exciting drive around town.
Southern Portugal is famous for its ceramics, and Lagos won't let you down. Ceramic dishes and tiles of all price ranges, styles, and colors are available. Some stores don't provide boxes for your goods, only newspaper wrapping, so ask before you buy, if it matters to you.
Portugal is also famous for its cork, in fact it's one of the largest cork producing countries on Earth. A short walk through almost any section of the town will reveal shops selling all kinds of cork products, from the usual coasters and placemats, right up to shoes, hats and handbags. Just as a note though, cork can be very expensive.
There is sometimes a small fair in front of the church near the harbor where unique clothing can be bought.
There are some wonderful family run operations in Lagos. Many of the restaurants are starving for business in the off peak time and will go way out of their way to make your visit to their restaurant a pleasurable experience. A regional speciality is chicken piri piri, barbecued chicken with the now famous piri piri sauce, truly delicious! Another local dish is the salted cod, which allegedly had 365 ways of being served, one for each day of the year.. The sardines in the Algarve are of the best in the world and local people cook them on small barbecues on their doorsteps, creating a delicious smell which wafts through the streets!
Some restaurants get really busy that reservations are required several days in advance to get in when you want to. However, this generally applies to THE best restaurants in Lagos and is a good sign of the restaurant's popularity, plus it ensures that you avoid disappointment.
Lagos bars are quite fun, catering to the young back-packing crowds. Often one can find a Brit or American helping to serve drinks (for a little under the table wage). For a drink that packs a punch, try the traditional Algarve drink, Medronho, better known as fire water, another Algarve drink is the almond liqueur, delicious after a big meal!
There is a large youth hostel in the centre of the city. However if you arrive in Lagos by bus there will usually be people there asking if you need accommodation. These are generally cheap and small, and a great option. There is a campsite near where the N125 crosses Estr. da Ponta da Piedade
If you want to get away from the backpacking tourists, head to Vila do Bispo. It's about an hours bus ride from the garage. From the Vila do Bispo bus stop it's about 5 kilometers to the beach. It's not a bad walk, and there are hiking trails that head off into the hills if you're interested too. The beaches are gorgeous and seem to never end. Beaches are clothing optional, but most people are clothed.