Beautiful bag! This kind of leather can be improved with a bath and conditioning. The water spots should improve or disappear. I see some faint reddish marks near the top edge...is that ink, do you think? I also see a ding on the piping. I've used a mixture of Fiebing's Leather Cement tinted with Meltonian shoe cream to fill small holes. You can also use fabric puff paint if you can find a close match.
Here's what I would do:
1. Vacuum it out thoroughly.
2. Polish the zipper pull and brass rings. I mask them off with a piece of plastic wrap, then polish with Cape Cod Polishing Cloths for Fine Metals.
3. Give it a 15-20 minute soak in tepid water and Dawn or liquid castille soap. Scrub gently with a soft brush.
4. Rinse very thoroughly and add vinegar to the rinse.
5. Hang upside down briefly (2 minutes or less) until it stops dripping.
6. Shape with towels inside (don't overstuff) and let it dry flat on a towel, turning periodically.
7. While still damp, start applying conditioner. I use Leather CPR. Keep applying conditioner, letting it dry overnight after each application. You might need 2 - 3 coats. After the last coat, let it dry overnight and then put on a light coat of Blackrock Leather n Rich. Wipe off excess with paper towel, let dry overnight, then buff with horsehair brush or soft cloth.
I think the lucky recipient of your gift will be pleased!