From Wiki Travel:
The heart of the Kathmandu Valley this ancient square crowded with palaces & temples, including the current incarnation of the Kasthamandap or "Wooden house" that gives the city its name. The square has been in active use since the construction of a palace around 1000 AD. This site is the most popular UNESCO World Heritage Site in Nepal.
Magical in the very early morning and evening, Durbar Square.
Film "Durbar Square", poetic short movie directed by Guillaume Boulanger, 1996.http://www.youtube.com/watch?v=IK2Gd300Sac
There are more than a dozen buildings and statues of note in this small area. They include:
It is possible to climb the steps of many of the temples for a better look, or to join the people sat at the top watching the bustle below
(My favorite part climbing the stairs to the top to watch everyone pass by. When it was there it began to rain, which actually left a magical feeling in the air walking through the streets and the temple areas.)
Also, my favorite place was Cream Bell with fresh made waffle cones and Fig and honey icecream and Rajbog(Indian flavor), which tastes like a glass of sweet lassi.