I would HIGHLY recommend Sesimbra. It’s a small coastal town Southwest of Lisbon that is just magical. There is a special flower that only blooms at night there, which smells amazing. Plus, if you rise early enough (or stay out late enough) you can use your nose to lead you to the local baker who provides bread to the whole town and purchase a few fresh loaves for pennies on the dollar.
As for restaurants? My best friend and I stayed with another friend, who is a local, and he recommended not to eat at the main ‘touristy’ looking places which are highly visible. Do a little trekking through some of the back streets and find a good ol’ portuguese coastal restaurant. The village fisherman bring in the fresh fish each morning, so be prepared for some huge sardines and the like.
Oh yea, Christopher Columbus set sail around 40 miles from there as well. Also, there’s a castle over looking the town!