You won’t find much in the way of traditional Nicaraguan crafts in León [1]. For that, you still have to make it to the Huembes market in Managua [2], or to Masaya [3]. You will, however, find plenty of used American clothes and old books, León’s specialties.
For books (and old Sandinista money), look for the sidewalk vendors near the plaza. The best shop is Librería Don Quijote (two blocks west of the park, open 8 a.m.–7 p.m. Mon.–Sat.), an interesting new and used book shop that sells many old Sandinista titles.
For crafts, Kaman, just off the southwest corner of the plaza (open 9 a.m.–6p.m.Mon.–Sat. with a break for lunch), has bead-making materials, bags and textiles from around Latin America, artsy postcards, and body piercing.
There’s a sprawling market near the bus terminal, or a smaller one immediately behind the cathedral with a selection for local shoppers, but not many crafts.
Links:
[1] http://www.moon.com/destinations/nicaragua/northwest-coast/leon
[2] http://www.moon.com/destinations/nicaragua/managua
[3] http://www.moon.com/destinations/nicaragua/masaya/masaya-city