The displacement of perturbed water upon binding is believed to play a critical role in the thermodynamics of biomolecular recognition, but it is nontrivial to unambiguously define and answer questions about this process. We address this issue by introducing grid inhomogeneous solvation theory (GIST), which discretizes the equations of inhomogeneous solvation theory (IST) onto a threedimensional grid situated in the region of interest around a solute molecule or complex. Snapshots from explicit solvent simulations are used to estimate localized solvation entropies, energies, and free energies associated with the grid boxes, or voxels, and properly summing these thermodynamic quantities over voxels yields information about hydration thermodynamics. GIST thus provides a smoothly varying representation of water properties as a function of position, rather than focusing on hydration sites where solvent is present at high density. It therefore accounts for full or partial displacement of water from sites that are highly occupied by water, as well as for partly occupied and water-depleted regions around the solute. GIST can also provide a well-defined estimate of the solvation free energy and therefore enables a rigorous end-states analysis of binding. For example, one may not only use a first GIST calculation to project the thermodynamic consequences of displacing water from the surface of a receptor by a ligand, but also account, in a second GIST calculation, for the thermodynamics of subsequent solvent reorganization around the bound complex. In the present study, a first GIST analysis of the molecular host cucurbit [7]uril is found to yield a rich picture of hydration structure and thermodynamics in and around this miniature receptor. One of the most striking results is the observation of a toroidal region of high water density at the center of the host's nonpolar cavity. Despite its high density, the water in this toroidal region is disfavored energetically and entropically, and hence may contribute to the known ability of this small receptor to bind guest molecules with unusually high affinities. Interestingly, the toroidal region of high water density persists even when all partial charges of the receptor are set to zero. Thus, localized regions of high solvent density can be generated in a binding site without strong, attractive solute-solvent interactions.