Red Sands is a small town located in the southern region of the Sonaran Desert, east of Buckeye and south of Cynthia's Gang's base. It's relatively small with not much in it barring some stores, a few houses, a derelict police station and a defunct hospital.
The only pivotal plot point that Red Sands plays is during the quest Alliance, at the end of which Bud Anderson gives the Survivalists the key to the hospital there in order to retrieve some insulin, explaining that he and Clay Parker worked there as the administrator and a doctor, respectively.