I’ve been, once or twice, to a classy establishment downtown called the 456 (one of my friends works there).
Upon entry, you may choose either a room or a locker. You are then issued a towel and some condoms. You go in and disrobe. At the 456, the lower floor is, indeed, a bathhouse: there is a large swimming pool, hot tub, showers, and a sauna. There is also a sort of drawing room with a TV and an Internet terminal, and a bar where health foods and light snacks are served. (In the basement is a gym; the place doubles as a health club.)
The second floor has many tiny rooms, as well as a porno theatre; upstairs has larger rooms and glory holes, in a “jailhouse” theme.
Officially the management frowns on actual screwing in the public areas, however the rule is sparsely enforced upstairs, and there is usually something going on in the porno theatre. I would say most of the people who go there, go there to meet people; some go with their dates, with or without the intention of supplementing their couple with another fellow or two. Condoms and lube are freely available; drugs are prohibited, and I don’t recall seeing anyone visibly sloshed.
In addition to actual bathhouses, some gay-run bed and breakfasts have a reputation for being especially cruisy, but one doesn’t necessarily go there in order to have sex.
Canada has some old, rarely enforced laws against running or being in a “common bawdy house” (i.e. a brothel). Although these establishments are not brothels (you are paying for the accommodation, and it’s up to you to find a partner; indeed, I know people who use it as a health club and/or cheap hotel), once in a great while the police force will take it into its head to raid one; the most recent case was in Calgary in December 2002, and I’m not sure what came of it.
Other famous raids took place in Montreal in 1990, after which footage of rubber-gloved police beating up protesters galvanized the community and earned the sobriquet “Montreal’s Stonewall”; and a raid on a lesbian sex party in Toronto in 2000, where male officers roamed the building for hours and then left without filing any charges.