A pleasant stopping point on your way further into Patagonia. Plenty of spots to buy hiking gear and supplies. Home to a number of good seafood restaurants. Has a relaxed vibe. Be sure to check out the Cementerio Municipal. Penguin excursions receive rave reviews but I didn't have time during my visit.
Punta Arenas is the last major settlement in Chile and a gateway to Antarctica by either sea or air. Chances are you're waiting to go somewhere else if you're here. When I was there in early 2013, there was a lot of construction so I expect the waterfront and city will be much nicer soon.
Punta Arenas is actually a fine city, but looks worse relative to surrounding areas. The city itself is the capital of Chilean Patagonia, and sports a spread out semi-city. Unlike nearby Natales, it's a somewhat bleak place, with a more rundown feel. Stop here only as a transport city - it's a useful bus and plane hub. If you have more than a day to kill, stop by the cemetery - although it doesn't rival the one in B.A., it is relatively interesting.
Punta Arenas is as far south as you can get in Chile. Strange light, flying saucer shaped clouds. Not so much to do here but fun to hang out after Torres, or as a jumping off place for Tierra del Fuego.