I think that the answer to your question, as many other, is "it depends", because it is too open. What kind of documentation? For what kind of tool? Is it a web

I think that the answer to your question, as many other, is "it depends", because it is too open. What kind of documentation? For what kind of tool? Is it a web app? Is it a programming language? A library or a framework? Is it a desktop app? Also, who is the target of this documentation? Everyone? Programmers? Depending on the answer to these questions, the answer to your question could vary from "make a video tutorial" to "write some man pages and a good README file" (with "FAQ page", "wiki", "html and/or pdf complete reference" in between). If your question is more about the "how" than the "what" then I suggest using a format which you can compile to different othe format such as HTML, PDF and man page (I already worked with DocBook but I didn't like it very much, maybe reStructuredText is a good candidate I'll have to try some day).