Sterilite drawers are quite popular. You can supplement with ziplock bags for smaller bits, or tackle box type things. (Basically what krushnine said.) What combination of sorting parts by type/size/color/function you use really comes downs to what ends up working best for you; if you have kids (as above) simpler is better.
I have stuff I got in 1970 in my collection and I'm still not happy with how I have it arranged. I have a few big bins - basic bricks in one, then some sub-sorting in the others with trays and baggies for things like "tires, windows, castle walls" etc. And a separate big tackle box for the Mindstorms stuff. A number of the kids' favorite sets are ziplocked separately for easy rebuilding.
There comes a point where that doesn't work anymore, sadly. Did you know there's a word in German for the sound LEGO makes when you're swishing your hands through them looking for something? GRUSCHTELING.