Because strong players gather here with 〜ので

Grammar Explanation: Objective reason with 〜ので

Cocoa inquires about the board and pieces sitting in front of Chino. Chino says it’s chess and gives a further explanation.

チノ:: 「この温泉(おんせん)は強者(きょうしゃ)が集(あつ)まるのでおじいちゃんは白熱(はくねつ)していました」; “Grandpa would get excited because strong players gather at this hot spring spa.”; Literal: “Because strong players gather at this hot spring, Grandpa was getting fired up.”
ココア:: 「温泉(おんせん)に浸(つ)かりながらチェス出来(でき)るのっていいねー」; “It's nice being able to play chess while soaking in the hot spring.”

Key Points

1集(あつ)まるので explains Grandpa’s excitement

Strong players gathering at the hot spring supplies the reason for おじいちゃんは白熱(はくねつ)していました.

2は and が mark two different roles

この温泉(おんせん)は sets the location as the topic, while 強者(きょうしゃ)が marks the players who gather there.

3白熱(はくねつ)する describes becoming absorbed

In this chess context, 白熱(はくねつ)していました says Grandpa would become fired up or engrossed in the competition.

4浸(つ)かりながら combines soaking and playing chess

浸(つ)かる becomes 浸(つ)かり before ながら, so both activities happen at the same time.

この (This): この means “this” or “these” and comes directly before a noun. It points to something near the speaker or something the speaker is referring to in the conversation.
温泉 (Hot spring): 温泉(おんせん) means a natural hot spring, or the baths and resort area built around one.
強者 (Strong contender): 強者(きょうしゃ) refers to someone who excels in strength, ability, or power, or who is in a position of strength.
白熱 (White heat): 白熱(はくねつ) literally means glowing white from heat. Figuratively, 白熱する means to become heated, excited, or intensely absorbed in a contest or discussion.