Everything I know about publishing e-books through Amazon's KDP platform and elsewhere (updated March 2020):
Worth viewing on a regular basis is the Kboards Writers Cafe, populated by many experienced self-publishers. (They do tend to be self-congratulatory.) I prefer the Kindle Formats forum on MobileRead dot com, though it doesn't get heavy use and tends to be rather technical. And of course the KDP platform has its own recently refurbished forums, of which I recommend that you go straight to the General Questions category, since few people are likely to read the lesser-used categories. I visit this forum every day when I have internet access.
I prefer to work in html and upload an epub (see below) because it gives me complete control over the book. There's a learning curve, but the same is true of any method of submitting books to the KDP. However, the Amazon software does a fair job of converting *.doc and *.docx files, if you are religious about using heading and paragraph Styles. (The more recent your version of Word, the better it works. Word 2000 is terrible; Word 2013 isn't bad.) If you're determined to go this route, here are some free resources:
Jason Vorhees Word Styles 101 video
Shauna Kelly on using Word (Basic Concepts, Styles, and Tips for Using Styles)
Tech Republic advanced formatting tips
Mark Coker's Smashwords guide
JT Bigtoad's rules for formatting Word
Tips for Formatting Your Book Correctly in Microsoft Word
And for transitioning from Word to html: Guido Henkel: Take Pride in Your Formatting
And whatever you do, PREVIEW that book after it has converted (Step 2 in the publishing process). I no longer use the downloadable Kindle Previewer software, preferring the online preview. Check you book in all the available emulations.
Amazon's latest trap for the unwary is a bit of software that makes the process easier but offers no real advantage over a well-styled Word doc. And it can't be used on Apple, Barnes & Noble, Kobo, Overdrive (for libraries), or any other non-Amazon platform.
I have settled on a single book file, style sheet, and format across all retailers. That requires me to build an epub. This is more challenging than Word, html, or mobi format, because epubs must be validated in order to get on the iBookstore. This is my system (subject to change, as always):
1) For a variety of reason, I generally wind up with my book in the form of a Word document. To turn it into a workable html file, I run it through word2cleanhtml.com on the web, a free service. (This also works for an Open Office file: just save it as in Microsoft Word 1997/2000/XP format.)
2) I then paste the html file into a template I have previously created. It contains the basic framework of a web page and a link to my standard style sheet. Clean up the word2cleanhtml file as needed (it's not 100 percent accurate) and validate the result at http://validator.w3.org/ -- vital for building an epub, and a good idea for uploading to the KDP. Though the KDP conversion is fairly forgiving, as applied to the e-ink Kindles, good html has become more necessary with the advent of the Fire and especially for the Look Inside preview.
3) I open the html in Sigil (a free download) and break it into chapters (epub devices prefer mutiple files to one large file). I use the Semantics and Metadata tools to build the OPF and NCX files, and I validate the result at http://validator.idpf.org/ -- vital for the iBookstore.
The resulting epub will work on the KDP, on Barnes & Noble, on Kobo, and will pass muster at the iBookstore.
If all else fails
If you're ready to move on from Word, but html terrifies you, there are three purpose-built word processors that will help you advance: Jutoh, Scrivener, and Atlantis Word Processor. Each costs about $40 and has a trial version, each will give you some control over formatting, and each will create an epub you can upload to the KDP or any other e-tailer. From my limited experience with these softwares, I would be inclined to favor Atlantis WP. For Mac users, there's the pricey but popular Vellum software.
I regard Kindle Select as a suicide pact under which self-publishers will eventually become unpaid or poorly paid serfs of Amazon. So I am a strong believer in making my books available through as many online bookstores as possible. I once uploaded directly to each site, but I now use Draft2Digital wherever I can. My sales breakdown over the years has been about 4/1 between Amazon and the rest of the world, meaning that I improve my sales by 25 percent by going "wide."
Similarly, for print editions, I use KDP Print and choose its "expanded distribution" option. I sell about 30 percent of my paperbacks through Barnes & Noble, the Book Depository, and other independent stores. However, if I were starting new today, I would buy my own ISBNs and publish the same book both on KDP Print and through IngramSpark, for maximum distribution and income.