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Teaser/Abstract:
There are two ways to get your bass into your computer or other recording device. You can choose Direct Input (DI) or use a microphone. This brief article discusses both approaches.

Body:
I've spent a little time in studios and have done a bit of recording on my own. For a long time, I was convinced the best way to get a good bass sound was never to route the signal from the pickups directly to the recording console. I had always heard that the direct input method (DI) was the way to go. But lately, I've had a change of heart. I find that I get the best, most life-like bass sounds by recording my bass just like a most electric guitarists record their guitars: by micing the cab.
Direct Input
The conventional wisdom about recording electric bass has long been to "go direct." A direct setup looks like this:

The advantage of DI is that the signal never passes through the open air. It moves from the pickups, through the direct box, to the mixing console. Assuming you have quiet pickups, you can minimize noise and eliminate cross talk between the bass and any other instruments or ambient sounds. The direct box is a necessary intermediary since the signal level coming off the pickups, even on an active bass, is quite low. The DI brings the "instrument level" signal up to "line level," which is what the mixing board wants. Using the direct box to raise the signal minimizes the amount of preamplification that is necessary, which in turn reduces noise (having to add a lot of gain at the pre-amp stage to correct a low incoming signal is a sure formula for adding noise to your track).
Micing the Cab
DI works, there's no doubt about that. But what if your bass isn't particularly quiet? What if it doesn't sound amazing right off the pickups. What if you use your amp to color your sound? If any of these considerations apply, then you might want to do as the guitarists do and put a mic on your cab. After all, if you've spent money on a decent amp and a decent cab and have spent years dialing in your live sound, why not use that as a basis for your recorded sound? Here's what a mic setup looks like:

The advantage of using a mic is that you get, with minimal effort, the sound that you hear off the cab itself. While expensive mics with really wide dynamic ranges can capture every nuance, you'd probably be surprised how good even something as commonplace as an SM57 sounds. A mic is practically the only way to go if you use guitar-style effects like distortion, as distortion-based effects tend to sound terrible when recorded direct to the console (since distortion relies on the speaker to help create the distorted or over-driven sound).
There are drawbacks, of course. You have to experiment a bit with mic placement (I prefer it close up to the speaker, just a bit off axis but still aimed, more or less, at the center of the speaker). The same mic that pics up your bass can also pick up other sounds in the room, including such undesirable sounds as your air conditioner or cell phone. If you're recording more than one instrument at a time, you're likely to have some of the other instruments, especially drums, bleed into your bass mic.
Computer-based Recording/Digital Audio Workstations (DAWs)
If you use your computer as a platform for home recording and you're just recording one track at a time, you can do without a mixing console. But you will need a pre-amp or audio interface of some sort. These boxes come in several varieties. Some are plug into your USB2 or FireWire ports. Some plug directly into the microphone port on your laptop or desktop sound card. Some are cards that replace your desktop sound card. A few install in an extra front bay on your desktop PC. Audio interfaces/preamp range in price from a little less than $100 to several hundred dollars depending mostly upon the number of inputs they provide.
Be sure not to confuse audio interfaces with MIDI interfaces. Some boxes function with both types of input. In general, if you're trying to record live sounds, including guitars, basses, and vocals, you'll need an audio interface. If you're exclusively recording MIDI-capable keyboard performances, you'll need a MIDI interface.
How do you know what's best?
Recording is an art and a science. The only way to really tell what works for you is to experiment. Your recording style will change over time, just as your playing style has. You'll throw out old techniques in favor of new ones. You'll learn from trial and error and from books and other recordists. As with playing, let your ears be your guide. If you can get the sound you like, it doesn't really matter how you get it. The only thing that really matters is the sound of the final product.