As you approach Lauterbrunnen the frigid valley with cascades falling down the vertical precipices helps you to remember. Yosemite. Aside from envision a medium measured town stuck amidst Yosemite valley.
Lauterbrunnen is the base for tourism in the mountainous region around Interlaken called the Bernese Oberland, which can be said to be the soul of Switzerland. The most famous peaks in this region are the Jungfrau, the Eiger and the Monch. We visited here as an overnight trip, and we liked it a lot more than Zermatt.
Lauterbrunnen seems nice enough, but there are several even more picturesque towns in the area that one can stay in. We stayed in Muerren, a sleepy town which hangs off the mountainside somewhere above the waterfall in the above picture.
The skilifts all shut down pretty early in the evening and the only thing to do in Muerren then is to walk the streets or dine while watching the setting sun hit the mountains. This is one big reason I prefered this region a lot more vs the Matterhorn: the main view here is lit up by the evening sun, whereas in Zermatt the Matterhorn is silhouetted in the evening.
In this region the trains go very high up into the mountains (the famous Jungfraujoch railway). But the next morning we chose to take a lift up to a mountain called Mannlichen that is not as high but which is a starting point for a very nice hike to Kleine Scheidegg. This spectacular (and fairly easy) hike lived up to its fame.
Highly recommended. Muerren was also an enchanting town. There is a nice hike off of Muerren up to a meadow with a nice restaurant. The views are great everywhere, and look their best in the evening light.