In response to JB's post, W is for Wandering Adventures, on the BX Blackrazor, I have decided to write up a brief how to guide for sandbox gaming.
Let me first say, however, that I don't subscribe to the school that believe the sand is the be-all end-all of campaign concepts. If that were the case, Pendragon (can you say meta-plot) would not be along my top 3 favorite role-playing games (along with D&D and Classic Traveler). There's nothing mystical or otherworldly about sandbox gaming, and the worst thing you can do as a potential sand-box referee is to place it upon a pedestal.
I often find that the concept of a sandbox to be intimidating to many would-be referees--as if it necessary to put in 100 hours of work before the start of play. I tell you what guys. I run sandbox campaigns near exclusively and I don't think I even put in 100 hours of campaign prep a year. For my current campaign, the only work I've done away from the game table is to make a shoddily scrawled map and label a couple of island (I really must get around to writing up session reports).
Similarly, my plays are rarely bored durning play. The way I keep them interested is not by planning out everything beforehand and seeing what they do with it, but watching their facial expression, learning their interests, and acting/adopting the situation accordingly.
Instead of spending hours and hours in prep work, I try to focus my energy to these five basic principles (which are not exclusive to gaming and can to applied to most aspects of daily life):
4) Reading Like a Maniac
5) Being the "Yes-Man"
Those are my five easy steps to being a sandbox referee.
Now allow me go through to explain each in slightly more detail.
Confidence: Confidence is NOT being the most egotistical or an unmoving wall of intellectual greatness (although those can be helpful). Confidence is not second guessing yourself and being able to open yourself and your ideas up to your players without the fear of potential backlash (which is extremely rare in the gaming world, in my experience; this isn't a dissertation or anything).
Don't worry that you don't have everything completely though out or that your players might not go along with what you're coming up with. In fact, minor inconstancies (and even major inconsistencies) can lead to great adventure hooks. Just act like you've had everything planned out from the get and keep asking questions of your players during the session ("what do you think the duke is planning), and riff off of their ideas.
Flexibility: Be willing just to go with the flow. Don't worry if you don't know where the river is going; just get in the boat and ride. The most important thing is to keep at least one eye on your players' expression at all times; try to figure out when they're bored, excited, disappointed, etc. Don't worry if they're angry, aloof or whatever. The key is to drag their emotions along for the ride. You want to keep them engaged, but don't worry if those emotions are negative 5 or so percent of them time, as long as they're excited, laughing, etc. for the rest.
Similarly, if something isn't working, either for your or your players, don't be afraid to take it in another direction. Mix things up; don't get too attached to any one outcome. Just go where the fun is, even if it doesn't quite make logical sense (that's when you start asking questions of the players and mining them for possible solutions). Turn the inevitable inconsistencies into adventure hooks. Maybe you forget the Mayor's name. Great, make up a reason why that's the case and offer to your players to figure it out. Better yet, ask the players why you think the Mayor's using a different name and riff off their ideas. If they just stare at you, puzzled, you're doing your job RIGHT.
Improvisation: Just go for it. I think I've covered most of what I want to say in the Confidence and Flexibility sections. To reiterate: don't be afraid to that a road you don't know were it will lead; just watch you're players expressions and adjust accordingly.
You dreams, book, movies, and--especially--the shower to generate potential adventure ideas that you can plot into your campaign. 90% of my D&D related thinking get's done at 5:30 in the morning.
Read Like a Maniac: I'm an English and History major. I do a LOT of ready for classes. And when I'm don't with that I read some more. I find being the best read member of the group to be a real boon when refereeing an improvisational sandbox.
Appendix N of the AD&D Dungeon Master's Guide is great and all, but is a bit intimidating if you're looking for somewhere to start. Here're my suggestions, specifically aimed at sand-box gaming:
1) Coming of Conan the Cimmerian
2) Tales of the Dying Earth
3) A Princess of Mars
Being the "Yes-Man": If a player want to do something, in game, go for it, let him/her do it--figure out how to let him/her do it--and turn it into a source of adventures and an adventure itself. Player-character run organization (stores, gladiatorial arenas, castles, entire countries, even a manager all have great potential). This is, by far the easier, and most important. As long as you learn to say yes and turn your player's desires into adventures, you've got your game made.
Conclusion: That it, that's what I do. Yes, I drew a map for my current campaign and wrote up s list of rumors for my City State of the Emerald Eye game. haven't haven't really done too much more prep work than that. Furthermore, I find that my adventures become much more interesting/creative/unexpected when I just let the world develop naturally and just allow the game to make its own course.
So good luck, and remember, just loosen up and have a good time. Don't take things too seriously. Cheers!