Fairly recently,I avoid online watching(I much prefer buying anime and manga in retails) though I did used to do a lot of downloading off many sites...
As of now though,40% of what I'm watching are on DVD,45% on my Xbox Live account (more precisely,Zune),8% on legal sites (Funanimation) and the last 7% is actual illegal downloading.

Here where I live I don't have an access to most of the 'legal' anime sites, nor can I watch them on TV here (except on certain other ways).
So I usually download them, but I always try to find them as legal as possible.
Also I always do try whenever I have the chance and money to buy anime in hard format on DVDs or Blue-Rays and I do plan to one get the all that I watched once and show appreciation at least in that way.

The old days I remember just consisted of IRC, KaZaA, and Toonami... I didn't know bluray's were around in the "old days" I'm no expert though, so I could just be clueless.

I have the premium subscription on funimation..

In the past I've bought, and returned many, many box sets, but that was when I had a good paying job, and lived a block away from an FYE in Portland Oregon..

I used to stream a lot from gogoanime, but now I use chia anime, for no reason in particular..

I do buy DVD's and other merchandise as much as I can though, cause that is the best way after all...

40% official/legal outlets like Funimation or the Roku's Manga Channel (a funny misnomer).
20% regular TV like Adult Swim's rerunning of Fullmetal Alchemist: Brotherhood.
40% DVDs borrowed from the library.

My favorite online sites to watch anime are Funimation and Justdubs.net, although I also watch anime on Hulu.

I prefer to read the manga, so it is extremely rare for me to watch anime. If I did I would use animehere or Netflix. I used to use Hulu. Other than that I can't really say.

I'm a vampire!

I usually don't watch anime, but when I do, I watch it on Crunchyroll or AdultSwim/Toonami on Saturdays. When I had onDemand, I watched some on there as well. Netflix is used for my whole family, so I don't want to freak them out with any anime :P. I just don't like watching TV on the computer.

I'd rather just read it.

I watch all my anime on Hulu. The constant advertizing is pretty annoying, but I'm too stingy to pay for a HuluPlus account and I don't want to pirate stuff. Pirating is bad, people!

I watch anime on animehere.

I usually watch my animes on Youtube or something

Fansubs and unlicensed stuff take up most of my anime viewing (80% or so). Official releases (in some form or other) take up the other 20%.

Watching newer airing shows helps me decide if I want to buy them if and when they get licensed in North America. If FUNi releases Jormungand domestically, I'll probably be lining up to buy the set. If anyone gets the rights for Hyouka, I'd throw my wallet at the company that releases it. (Just don't give me any of that subbed-only jibber jabber. Releasing a subbed-only DVD in North America is like making the fandom pay for a shiny fansub that comes with bells and whistles.)

As far as quality goes, some fansubs of newer shows look darn good. Hyouka was poetic, and only the most inept fansubber could have messed it up. Of course, that has to do with the quality of the animation itself (On the other hand, Aracana Famiglia was dumpcity, which no amount of polishing could have make it attractive to even a fly). That said, give me a quality release, and I'll buy it. (Will someone license Black Rock Shooter in North America already!?)

I'm not sure what percentage. I mostly watch one piece nowadays. Though I do use two different sites: Whathop.com which updates weekly as the episodes come out in japan. (naruto, bleach, one piece) they also post the manga (which is likely fan translated) Then there is justdubs.net which houses a large variety of anime series as well as movies. Just dubs is free. Though whether the series is dead or not is hit and miss because on the more popular series there will often be an episode or more that is a broken link. Likely taken down by a company. It's not the most reliable but it'll do in a pinch.

I watch my anime on crunchyroll and funimation, I don't really see a need to torrent anymore.

If I want to watch an anime, first I try to make sure it isn't on Hulu, Crunchyroll, Netflix instant view, or Funimation's site/youtube channel. If it is, I watch it there, and if it isn't, I'll just google it and try to find a video that way.

I actually mostly buy DVDs if I like it. But when funds are low I watch anime on FUNi and on the official Naruto website aka VIZ.
Every once in a while I use Dub happy when I want to see if the dub is any good.

I use either justdubs.net or Funimation.com or even youtube.com

If they make it available officially, I watch it officially -- usually use Netflix, YouTube's official FUNimation channel or Crunchyroll to preview, and if I/my family likes it, we buy it. (It's like being able to rent, which I love!) If it hasn't been released where I live for whatever reason, I'll stream from sites like AnimeFreak and WatchAnimeOnline. I'd say the percent is about 50/50.

I actually am one of those people (looks like we're pretty few) that only watch DVD's. I have a couple of reasons for that. The two big ones for me is that I hate watching TV on my computer - I've done it when my TV has been on the blink, but if I can avoid it I will never do it again. The second one is that I like having a permanent, physical library of shows - whenever I want to watch something, all I have to do is pop the DVD in.

I'm a Hulu person, myself. When Hulu came out, I was so glad that I could watch anime online in a legal manner.

I had downloaded fan-subbed stuff way back when, which I hated doing because (1) it wasn't legal and (2) it wasn't official. Plus, for English fan-subs, they used waaaay too much romanji. And they used it inconsistently, too. I hardly know any Japanese, so I'm glad that all the really, really long attack names that characters shout out are translated. (Conversely, I'm a bit disappointed when characters' names are romanized so that the family name is last.)

There are a few drawbacks to watching Hulu. They're a bit dysfunctional in that some of their anime is in the "Animation and Cartoons" section as opposed to the "Anime" section. Also, the selection is a bit limited. I'm a strictly subtitles person, so I'm a bit disappointed when Hulu only has dubs of certain anime (they have no control over which version they get). There are also weird situations when something is translated very poorly.

If I can't find it on Hulu, another thing I can do is check my library. My library is part of a network of libraries that shares all their resources, which means more access to anime DVDs that one library alone may not have.

In the unlikely event that I have to resort to any less-than-legal methods, that means I'm REALLY DESPERATE to watch something.

I have a question for you Netflix users: what's the selection like? Also, I don't have a subscription (obviously). Is there a way I can see their selection without subscribing?

I would say 30% are legal, through the official channels of french editors on Dailymotion, 35% would be on sites like goodanime when the editors do not share it online and the other 35% are DVDs, since I like to buy the animes I liked or sure I would like.
I have that little problem as a French (and I believe it's like that for a lot of Europeans): I am most of the time not allowed to access official websites where I could watch anime legally...! :(

I usually watch anime on Netflix these days. They don't really seem to have as much new stuff but they do have a good selection. And if possible I sometimes get the actually DVDs to watch, but it depends on the price of the DVDs in question and how much I like the series itself.

In the past I've also watched anime on Youtube, but I'm not sure how legal that is.

I'd say about 90% legal and 10% video clips uploaded to YouTube (which would be the illegal part, but they posted it, not me) I tend to stick to Hulu mostly (for Toriko and older One Piece simulcasts that I missed from previous weeks) and OnePieceOfficial.com, with a bit of Crunchyroll. The rest is all on DVD (some my own, and some from the library).

For me it's 75% illegal and 25% legal... I can't help it though... I'm more into downloaded stuff..

It depends on it. I watch anime everywhere.

I watch anime on Netflix or FUNimation. That's it. Nothing else.