There are so many good diving areas that it is hard to choose your destination. Most popular destinations are Sharm El-Sheikh and the South Coast cities. All of these are focused on mass-tourism. Generally, you could say that the more south you go, the less touristy it becomes, but that the more difficult the diving conditions (Dahab is the exception to this rule, it’s less touristy and has also easy diving). So the best way to decide where to go is to determine a) your level of diving and b) the type of tourist destination that suits your (downtime) preferences.
Egypt is the oldest and most well-known tourist destination in the world with ancient monuments and world-famous diving. Broadly speaking, tourist areas can be divided into the Nile Valley, the Desert, and the Red Sea and Sinai region. The ancient sites are found around cities like Cairo and Alexandria and along the Nile valley. Needless to say, water-sports and diving are concentrated along the Red Sea. Egypt has many things to offer, both above and under the surface.