The waterfront promenade of Hora is lined with tavernas catering almost entirely to the steady stream of ferry arrivals and day visitors. The quality is what you would expect from restaurants operating in that position: adequate, consistent, and priced for people who won't return. Fish and seafood are expensive and sometimes frozen despite the descriptions on the menu; salads and grilled meat are more reliably done. The view across the harbour to the Portara is the attraction, and nobody is pretending otherwise.
That said, a meal on the waterfront at the right time — early evening, before it fills, with the Portara silhouetted against the last of the light — has a particular pleasure that the better restaurants in the backstreets don't offer. If you're going to eat waterfront, eat early, order simply (Greek salad, grilled octopus, local bread, house wine), and treat the location as the main course.
The genuinely good food on Naxos is found in the backstreets of Bourgos and the old town, where rents are lower and the clientele more mixed. The key marker to look for is a handwritten menu in Greek alongside the printed one in English — it usually means the kitchen is cooking for locals as well as tourists, which tends to improve standards considerably. Naxian potatoes, local graviera cheese, and fresh-caught fish cooked simply are the island dishes most worth seeking out wherever you find them.