The best area to stay in Kailashahar is typically near the town centre, as this offers the most convenience and access to local amenities.
The main area of Kailashahar is relatively compact, with most shops, eateries, and local services concentrated around the main market and the roads leading off it. You'll find a few guesthouses and smaller hotels in this central part of town, making it easy to reach places on foot or by local transport.
For any traveller, staying centrally is the most practical option.