Katelios takes its name from káto Eliós which means 'lower Elios' referring to the geographically lower plain of the Elios region that covers part of the south-eastern edge of the island. Although Katelios has never been referred to as a village in the strict and traditional sense of the word, it does contain two settlement hubs—one at the north-eastern edge of the plain, and one along the waterfront—which have steadily been increasing in numbers in the last thirty years.
Katelios was traditionally a primarily agricultural area used by the inhabitants of the nearby villages. Long before tourism set in Katelios, its seafront taverns were already a well-known destination for enjoying fresh fish in the island. Located on the edge of the Aenos mountain range and on the south-western foot of the ancient castle of Pronoi, Katelios is the southernmost settlement of Kefalonia with views towards both Peloponnese and the Island of Zante.
Moving from the agricultural and fishing economy to tourism, the resort of Katelios emerged and developed with respect to the surrounding area that retains its agricultural character thanks to the discreet tourist development of the area. It is known as a quiet resort in which guests receive the hospitality of usually small, family-owned businesses of hotels, restaurants and other establishments, and in which a guest may enjoy the landscape, the nature, and the sea.