Throughout childhood we parents/caregivers/teachers struggle to find a good balance between giving the child freedom to explore and play, and structure to learn and grow. Everyone has their own style, which usually falls into one of three frameworks. The first, which many of us older parents are familiar with, is the authoritarian parenting style. If you find yourself saying 'because I said so'; punishing, giving strict limits and lots of inflexible rules, you probably fall into this category. It has the advantage of immediate obedience and dependability in most kids. However it can also breed resentment, limit self-control, and damage the child's ability to think and decide for himself as he grows.
The second general type of parenting, permissive parenting, grows from the theory that kids know best what they need, and will grow out of any problems on their own. Permissive parents don't punish, but they don't offer much guidance either. If your kids are allowed to run around grocery stores and restaurants, if you find yourself telling them to "work it out on your own" when they're squabbling, and if you often give in to whining, pleading and tantrums, then you're probably acting the permissive role. It has the advantage of giving kids lots of room to learn, play, and practice independence and curiosity. Unfortunately it's a bit like setting a kid loose on a tightrope and telling him to figure it out. Rules do have a comforting place in kids' lives, and kids without rules can be angry, controlling, demanding or depressed, depending on how they percieve parental laxness.
The third parenting style is called "authoritative" parenting. These parents set a few easy to comprehend rules, do not request anything of the child that they don't intend to follow up on, and use a large toolbox of parenting skills, adapted to their children's developmental and emotional stage. They see discipline as a learning tool, not as punishment. Parents in the authoritave mold will give their kids freedom to make choices, teach them to think through the outcomes of those choices, and help them to problem solve so that they can learn to self-regulate as they grow.
I don't think it's any secret which parenting style I think works best, but I don't think anyone is always "authoritative"-- we all have our exhausted "let em be" times and our grouchy "do as I say" days -- parenting is not about perfection, it's about doing your best at the time, learning better when you can, and being your child's best guide to her future adult self. Remember, we're all raising people, not just minding the children.