For me as a player, the DM needs
A) to work out the details of his world
1. religion:
- who are the gods?
-what are their domains?
- what is their relationship with one another
-what does each deity expect of its worshippers behaviorally? Having this preplanned lets players of clerics, paladins, know what is and is not considered proper behavior.
2. geography: Even if just major countries, rivers, forests, mountains etc.
3) cultures:
- What are the cultures?
- What are the cultures like? How do they differ in subsistance, social structure, religous practice (shamanism, polytheistic, etc.), method of exchange, mores, and technology? How do they dress and what type of body adornment is common? Is anything regarding clothing or body adornment restricted to certain social status or membership in certain organizations.
- What are their relations like with neighboring peoples.
- what classes and or class variants are found within each culture and which are restricted?
3) Some major organizations for each each culture:
-what are some major organizations and/or orders for each culture
- are they known? If so, locally or more widespread
- how are members distinguished by certain styles of dress, specific articles of clothing, or symbols.
- what are their behavioral requirement if any
- who are some prominent NPCs
4) work out some other major NPCs for the cultures
5) work out other aspects (e.g., politics, warfare, strange happenings, etc.) that affect various areas.
6) come up with some interesting locales for possible adventuring. They don't all need to be fleshed out, but they give character places to consider for later.
B) Sit down with me during generation and help build a character that will fit into the world
1) provide a one or two sentence description of each culture along with a list of available classes and races to each culture.
2) Once, I have some ideas of what I might want to play, give me further campaign specific info to help me narrow my choices or tailor my character. More detail on the cultures (e.g., some general cultural attitudes and social mores). Info on what organizations might the chararacter need to belong to and what they are like. If I am a religious class or character what are the deities like? What are the domains and teachings? What other details I might need to know?
3) Once, I narrow down my choice, give me some more information so I can fine tune my character.
a) If the character belongs to an organization, who do I know? What is special in terms of dress or adornment that signifies me as a member of an organization.
b) if he or she don't belong to an organization, who trained my character? If the trainer must be someone special (e.g., a particular NPC wizard in my region due to lack of magic wielders), who is it? If trainers are common, then that gives me a little more flexability in background.
c) what are local or regional events that of importance? If we are at war or were at war in the recent past, I may use this to influence my character's attitude towards a particular race, region, organization, etc. or I may use such knowledge as a motivation for adventuring or just as general personality. Then again, I may not, but at least it it gives me some more knowledge to draw from and gives me a little more knowledge of my character's homeland.
d) Once, I finalize my background, work with me to make any final tweaks
4) Provide me with some other starting knowledge based upon my background.
- What are some things that a character knows just by growing up in a particular culture, region that would not be available to someone from another culture or region without an appropriate knowledge skill?
- What special knowledge might I have from training with someone special or belonging to an organziation that a normal person from my culture would not have?
edit:
5) Let my character and the party go where decide they want to go (assuming it is plausible and they have the means to get there).
I don't mind an intro adventure that unites the characters preferably if draws them together based on the character's motivations and/or backgrounds. However, once the party is together, let them make their own way in the word. Let them seek out adventures of their choosing. Let them make their own friends and enemies based upon their own choices and actions- even if those new friends and enemies are merely individuals who have caught wind of the players exploits and would react accordingly.