The Large Square (or "Piatza Mare" in Romanian) is the center of Sibiu. Just ask anybody on the street how to get there. From the Large Square head to the General Magheru or Gheorghe Lazar street. Exit the Large Square and turn right on the Gheorghe Lazar street. After a short walk you should be in front of the hostel (at number 6, on the right side).
From the railway and bus station you can see the tall church towers, head right for them and you will find yourself on General Magheru street. When you reach the end of Magheru street (just before entering the Large Square) turn left, and you will be on Gheorghe Lazar Street. After a short walk you should be in front of the hostel.