I prefer thinking of it as a 'timeline' vs 'outline'. What needs to happen and in what order. Mostly a means of keeping the facts straight and the writing on a path toward the conclusion. I don't make it too rigid as the way I write things get invented as I go. Sometimes ideas get dropped from the timeline because the story has found a different or better way to go than I intended when I made the original timeline. Always be flexible.
I do my characters before anything. Then I do a bullet point, then I write small (Between 300 - 600 words) scenes and smoosh them together to see what happens. As for what's best, I think it varies from person to person. Try a bunch and see what works for you.
I wrote my first novel entirely by the seat of the pants ...no outline at all. I kept a timeline of events as they occurred, sandwiched in with events that took place in the 'real world' at the time ...I write historical fiction laid in the late 19th century, so it was important to me to keep track of what was happening elsewhere at the time of my story. However, I've developed a new 'outlining' procedure for the novel I'm constructing just now. I've divided the novel into sections (beginning, middle and end) and am dividing these sections into chapters (each given two full pages in my large paper notebook.) I'm noting down events that need to take place in each chapter, and writing down specifically what I want each chapter to accomplish. I can also throw in bits of dialogue as they occur to me Again, I need to dovetail my story into 'real events,' but this novel is also a sequel with an already-determined purpose, so I do need to plan this time.
What do you mean. How it works? You take a stack of index cards and use one per scene, writing either the scene title or a brief description on it in big letters. Then on the back you can add details to include, anything notable that will go into that scene. I may use the back for a brief staccato play-by-play of the high points (main ideas or scene 'beats') Then I spread them across a table and put them in order. Sometimes I move them around, reorder them, maybe place a blank one in between two cards where I realize I need a new scene but haven't thought of it yet. Shuffling them is quite fun, to see the new juxtapositions. It's open-ended, too. You can generate as many scenes as you want, even many you may ultimately not use. And you can always combine two or three cards into one scene, later. This is basically a Roman Outline, done in a tactile manner. Same principle. Also, I should mention that the new 'way' is to use sticky notes instead of index cards. I like both, for different projects. This is mostly a structural exercise you do once you already know who your characters are and what the problem is and what the larger plot is gonna be.
As with many things, the outline that works best for you is best. I've tried many different outlines, and found screenwriting works for me. There's no universal method for outlining. I like screenplay formats because everything is broken down for me. I've got a scene heading: INT. JUDE'S HOUSE CUSTODIAN OFFICE - NIGHT I can be as vague or specific as I want. I specify interior or exterior (INT. or EXT.), the location, and a general or specific time (night, 3 AM, moments later, etc.) Then I go into description. Thinking of the story in a movie format helps me to focus on the details. For example, in the Jude's House custodian office, there could be white tiles, black walls, posters of boy bands, and an inert grenade on a keychain. None of that is vital to the scene, however. Here's what I would put: An old desk with a penguin-shaped alarm clock takes up most of one wall. A space heater blazes red hot in the darkness next to it, illuminating a janitor's cart that crowds a cot against the opposite wall. Vincent "Jester" Achan lays on the cot, though we don't see him clearly. He can't sleep because of the distant pounding at the front door. Jester looks at the alarm clock. It's 3:00 A.M. That gives me the bare bones for the setup. My software (Scrivener) formats it all coherently, and I tend to follow conventions as though I'm making a movie (capitalizing character names and essential objects, for example). I can go through and add dialog, action, and specific ideas I want to point out in the narrative. I prefer screenwriting for outlining because it's essentially already an outline format, just for a movie. It is consequently focused on the essentials in a way that readers familiar with some industry terminology should be able to read it and see the movie in their head, the way I see my stories.
What I usually do is get down my characters, plot points, and basic story put into an outline. Often I will write a scene and put it in the outline, only to go "nah, that should happen after this, not before it." This why I can easily move and restructure things at needed. Only when I feel ready do I put things in an order to be used in the rough draft.