Aguas Calientes is the colloquial name for Machu Picchu Pueblo, a town on the Urubamba River in Peru. It is best known as the closest town to the tourist attraction, Machu Picchu, which is 8 kilometers away. It has many hotels and restaurants for tourists, as well as natural hot baths, which give the town its name (Aguas Calientes means "hot waters" in Spanish).
Apart from Machu Picchu, there are a number of interesting walks in the area. Putucusi, a mountain opposite the river from the ruins, is a popular hike and provides excellent views.
Information based on http://en.wikipedia.org/wiki/Aguas_Calientes%2C_Peru