This is a very large area with a lot of different opinions. There are a lot written about this here on Mobileread. I have only very limited experience, and then mainly when it comes to making epubs and PDF:s.
But one way of producing a mobi book could be to first create a epub, and then convert that to mobi, or some other format.
Markup (or markdown) is a technique where you add hints in a regular text file, to make later conversion to HTML/XHTML easy. It will produce very clean and lean HTML/XHTML.
You can read more about Markdown here: http://daringfireball.net/projects/markdown/
Markdown is especially interesting because Calibre can handle it and use it to create mobi or epubs. I haven't tried that so I don't know how good that is.
I have mainly used AsciiDoc to mark up textfiles to create XHTML and epub. You can read more about AsciiDoc here: http://www.methods.co.nz/asciidoc/
I start with a plain text file and use AsciiDoc to add all formatting and images and so on. After that I generate an epub.
After the epub has been generated I may edit it in Sigil and/or touch up the CSS if needed. Sigil allows you both to edit using WYSIWYG tools, or to hand code the XHTLM code. I like it a lot!
If you already have a book ready as DOCX it may feel bad to make it into a plain text file and start over with the formatting...
There are a lot of cool things you can do if you stick to plain text files while writing. Like using standard version control tools and advanced text edtors that allow you to fold in and out text. But it may help if you have a background in programming...
I am sure that there are a lot of others here that have completely different ideas about how to make a book.