I think it should be "Donde es el bano?" as it's location is not a temporary thing.
"Donde esta el baño" is correct in Spanish as it refers to a place.
"Donde es el baño: would translate more like where is the essense (being) of "el baño."
Es is a conjugate of "ser" or to be.
Estar is more complex as in this case its meaning is seen as to be here.
