Hamada
Hamada is the largest town in the Iwami region. The sites are quite spread out but there is a good network of buses. If you are coming with kids, don't miss the aquarium and its play park, and the children's museum, which runs inexpensive art workshops for kids at the weekend and during school holidays. The seaside is spectacular and it's well worth staying overnight in log cabins by the sea to enjoy the beach in the early morning or late evening during the summer months.
Local sea food is excellent and even the conveyor-belt type sushi shops are a step up from the normal fare elsewhere in Japan. There are some nice cafes too. Around the station, there are a lot of issakaya, or traditional pubs where you can sample local sake and try Hamada delicacies.
Children will enjoy Iwami Kagura, the local performance art often featuring the hero slaying fire-breathing dragons. Many shrines perform night-time kagura. Call tourist information to get details of performance times. And if you can't see a performance, you can always see the kagura clock at the station, which features an animatronic kagura display on the hour.