
Essentially, the application consists of textboxes that can be sized and arranged on a large backdrop. Each box contains one section for a title or heading and a second section for content. Colors can be applied to each box's borders, titles and content. I prefer setting the border colors according to plots.

I've written a number of other applications over the years. One served as virtual index cards that I intended to use for character bios, description of places and things, etc., but I've found that my scribblet in Magic Muse serves that purpose well enough for me.
But as much as I love my electronic tools, I don't rely exclusively on them.
Whiteboard

I use the fine-tipped dry-erase markers so I can scribble loads of legible text. I'll occasionally jot down the names of characters that need addressing in the story and how soon. I'll work out plot mechanics for finding logical reasons for Character A to be in Location B so that Event C transpires according to plan. I may write about dragons and magic, but even they must adhere to some form of logic.
Journal

I used this method for working out details of the last major war in my book, exploring treaty details, discovering the origins of races, even for writing short stories that serve no purpose other than enabling me to flesh out characters before they make it into the book.
The actual manuscript
I sometimes type quick notes, reminders, potential dialog or possible narrative snippets right inside the manuscript itself, usually at the end of the scene or chapter. I do this when the snippet must be addressed or incorporated before moving too far into the next scene or chapter.
I've tinkered with index cards, college or narrow ruled spiral-bound notebooks, even loose leaf paper, but I really prefer a searchable, organized electronic means to store notes. And of course, I now have my Android tablet. It's great for proofing what I've written. The format and display is just different enough that I'll spot mistakes that I've overlooked a hundred times on the computer monitor.
What tools do you use?