To bind or not to bind, that is the question. Would it help you to answer the question if I was to say that that there is one method that makes the process relatively simple?
Binding can provide a beautiful decorative accent to you guitar body, particularly if you use it as a way to add some continuity of colour, such as matching to a pickguard or neck binding / colour accents. Some guitars lend themselves particularly well to binding, due to their 'slab-sided' profile (such as Telecasters), whereas binding a guitar with comfort
contours can be more tricky, require some complex jig(s) and be an acquired taste (aesthetically speaking).
So if you've decided that binding is for you the good news is that its not nearly as complex as it looks, it will however be a little time consuming and require some planning and a specialist router bit. The most common type of binding on electric guitars these days is plastic (white or black) 6/7mm x 1/1.5mm. This is what I'd suggest installing as your first binding, and thankfully that's likely to be what most people are typically going to want.
There are a couple of important reasons for this. Firstly, a standard binding router bit will suffice and you will only need to carve one binding channel into your guitar body, thereby reducing the margin for error. Secondly a plastic binding can be applied by melting the binding to the guitar body with the use of Acetone, which may sound intimidating but has the following advantages.
Using acetone rather than glue will not leave any marks on your guitar body or adversely affect any of your finish in any way
The melting process is very quick and allows you to (within a few minutes) ensure your binding is positioned correctly and firmly fixed
If you leave small gaps, they can be filled using the same melting technique later
if you beak or snap the binding at any point (which is actually quite easy to do), you can simply melt the two broken ends back together for a seamless fix
When to Install the binding
There are two preconditions; Firstly the neck pocket has to be cut because the binding will flow directly into the neck pocket. Secondly the edges of the guitar have to be perfectly smoothed. That is not to say that the final sanding has to be done, just that there are no dips and/ or dents remaining on the side of the guitar. This is because a binding router bit runs on a bearing and follows exactly the contours of the edge of the guitar, so if there are any lumps and bumps left to sand flat, then these will be reflected in the channel you cut for your binding. Typically I install binding after I've completed all the routing (for pickups, neck pocket etc), but before I've started any finishing.
What's the process?
Route the binding channel
Fix the binding to the guitar using masking tape
Melt the binding onto the guitar
Wait for it to dry
Sand off the excess binding on the top / bottom of the guitar, level with the wood
Scrape the binding on the sides of the guitar level with wood
Tips for getting it right.
As mentioned earlier, make sure the edges (sides) of the guitar are smooth and any dips/bumps are sanded out before routing
Do not try to get the depth of the router bit exactly to the height of the binding, aim to cut the channel slightly thinner (about 1/4mm) than the 6 or 7mm binding width. You want to be sanding the binding level with the body not the other way round! You're in for a world of frustration, and likely stripping the binding off if you slip up here.
Don't push the router into the body when cutting the binding channel, just allow it to roll smoothly on the bearing against the side of the guitar body. Binding bits are fragile and when you're only routing 1 to 1.5mm into the wood its easy to apply too much pressure and deflect the bit enough to carve your channel a bit too deep.
When fitting the binding to the guitar body, heat the areas of the binding where there are sharp bed or contours to avoid snapping the binding.
Aim to tape up the binding to the guitar body so that the binding is flush and tight to the body, as though you were actually gluing it. Don't worry the acetone will find its way right through.
When applying the Acetone, do so with a syringe. It avoids flooding and messiness and is the most controllable option.
Work 10cm at a time, applying enough acetone that you can see it just start to work its way all the way under the binding, you'll notice it seep its way all through the binding channel
Using a scraper or razorblade on the edge of the guitar (particularly if you're double binding) will get the best results for shaving the binding level with the wood.
So what about fixing gaps after its dried and sanded?
Pour some acetone into a glass jar and (with a razorblade) shave some long strips of binding into the acetone and leave overnight. The plastic will have melted into a paste that can be applied to any gaps and seamlessly fill any imperfections. I find a wooden toothpick is the easiest way to apply this.
Now, if you want to apply multiple layer or wood binding that's another story....