I sort kinda by type or specialty then color. Also by size. For instance, I have all my Florals together, Military type fabrics are grouped, as well as animals, and bali's and childrens fabrics. My flannels are separate as well. Christmas and holiday are in their own groups. I do have a lot of blenders and tone on tones, those are by color groups.
Then within those groups they are grouped by color. My fat quarters and less than 1/2 yard cuts are in a couple plastic rolling drawer carts, my 1/2-3 yards are mostly in my cabinets. I have one cabinet that is all back size pieces. I also have several Rubbermaid tubs that are full of Back size pieces. My flannels are in the Rubbermaid, those are all in the garage a few feet away from my sewing area.