A lot of my stash is scraps from some quilt or sewing project I've done in the past. Larger pieces get folded and stacked on shelving. Smaller pieces get put in clear plastic boxes by color. I love to applique and so many of these smaller pieces will make a leaf, a flower, or a wheel on a car for a baby quilt. I do have strips that I cut 2 1/2" as well because I love to do those piano key borders on quilts.
I have seen some spectacular scrappy quilts made with small pieces that are made into blocks and I'd love to do one but haven't so far because I'm trying to get all my UFOs done up..... and then there are always things that come up, daughter's 25th wedding anniversary or yet another grand niece or nephew that needs a baby quilt.
Good luck on finding YOUR method that works for you.