Science fiction and Fantasy author Tad Williams has some great advice about world building:
Another thing that always works is what I think of as the Keyhole Effect, although you could just as well use the old idea of one of those Easter eggs with a little diorama in it. In other words, the reader has to get glimpses of deep background to your world. You don’t have to show the entire world and all its history — show or describe too much and it gets boring — but when they do get a chance to look past the main story, they should see something of lands beyond — select glimpses of greater depth, greater history, greater vistas beyond the main story. And the good part is, you don’t have to invent every detail, just enough to have it seem real.
That’s because in ordinary life people (other than me — I’m notoriously bad about lecturing on things that interest me) seldom say, “And now we’re going down Famous Old Road, where a lot of important things happened, such as blah and blah and blah…” But if you name that thoroughfare Famous Battle Road, or Famous Citizen Road without going into much detail, you actually get more world-building mileage out of it. Because that’s how things work in the real world, and that’s something readers understand even when they don’t actually realize it consciously. Very seldom do people say, “It’s down in the Battery District, which is where they used to keep the cannons hundreds of years ago.” They just say, “It’s down in the Battery.”
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If I can just keep this in mind, I might be able to write this book without going insane or (more likely) abandoning it several chapters in.
But I still go crazy when a character I've written reaches for coin to pay for something and then I realize I haven't figured out currency, or the system of government (would someone's face or sigil be stamped on the coins?), etc. etc.
Carlo Gébler, one of the writers I studied with in grad school, used to advise just making a note for later and powering on. Then, when the first draft was finished, he would say "Right, I know that I need to research this, that, and the other," and that would be a much more fruitful use of research time for him. Instead of anticipating what he would need to know, the research (or world building) came after, when he already knew what he needed to know.
You know...?
So that, and the "keyhole effect" approach, is what I'm trying to do. How do you guys approach world building?