Note: you will think you are in Italy at some point. Granada is one of my favorite walkable cities in Nicaragua because how much there is to explore. Throughout the bright colored houses and piazzas there are lots of churches to walk in and out of. They are all so different, very gorgeous and have different historical significance.
There are six main churches in Granada: the Cathedral, La Merced, Guadalupe, Xalteva, San Francisco and María Auxiliadora. Even if you only get to walk in and out of a few, they are very interesting and a sacred part of the culture.