If you like campfires when you camp, don't camp at the town site. No fires down there. My wife and I used to camp at Crandell campground, which is on the way to Red Rock Canyon. Bears regularily wander through the campground so you have to keep things neat, tidy and packed away. One morning I woke up, got out of the tent and just down a trail was a park ranger and some guy talking. They were obviously watching something so I went to check it out. As I approached I overheard the ranger saying that the bear was wandering straight up this pathway and pointed at the path that went straight to my tent. I'm glad the ranger was around to shoo the bear away.
There are many good hikes at Waterton. Bear's Hump is a short hike, but relatively steep. The view of the townsite and lake is well worth it.
I've always enjoyed going to Red Rock Canyon, there are a few trailheads at Red Rock Canyon, including a decent mountain biking trail.
Somebody mentioned a hike from Cameron Falls. It actually takes you up to a summit, and if you kept going down the other side, you would wind up at Cameron Lake. Speaking of which, Cameron Lake is another popular destination in Waterton. If you walk along the right side of the lake you'll get to a point where it warns you that you are entering into Grizzly Bear territory. I've never seen one up there, but I know people who have encountered bears there.
If you want to see wildlife go to Waterton. Seeing wildlife is a guarantee. You'll have been extremely unlucky and should never EVER buy a lottery ticket if you go to Waterton in the summer and don't see wildlife.
Every year on Canada Day we go to Waterton with my wife's family and have a picnic. We go to the same place (a nice creek just off the road), and see the same people at the other picnic locations. Then we go get ice cream...
... I can't believe nobody has mentioned the ice cream. I don't know of anybody who goes to Waterton and doesn't get ice cream (except for the lactose intolerant sissies
). You can't miss the place, it is the one with a lineup extending out the door (and sometimes down the street a bit). The place is called The Big Scoop.