It is perfectly located so that you can explore every inch of the Alfama neighborhood with easy access to several public transport options. A lot of very nice and reasonably priced restaurants around. Moreover it allows you to go by foot to pretty much all the major tourist spots in Lisbon.
One warning though. If you plan on booking it during the Portugal day celebrations (10th of June) be advised that it is quite noisy at night. During our stay, for 3 of the 5 nights they had a stage near the location that blasted music until 2 in the morning. Granted I think it was just a bit of bad luck on our side since in other locations in Alfama they seemed to stop sooner but be forewarned.
The other two nights it was ok and there were no issues. Everything from check-in to leaving went smoothly.