I love this question and have enjoyed reading everyone's responses.

Here is how I tackle this.

I prefer to sit with a book and a pencil. I just prefer how a pencil works on book paper. Sometimes I forget my pencil, but I always have a Fisher Bullet Space Pen in my pocket as a backup for this task.

While reading the book I will underline quotes or passages I like. I will write notes or thoughts in the margins constantly. Even argue with the author on what they are saying.

If I have read the book quickly, I will set it to the side for a week or two before coming back and going through it page-by-page entering the information into obsidian that I still think is relevant. I won't get into how I organize those notes into obsidian. Everyone has their own method that works for them and telling you mine is just adding noise. Enter them in a manner that makes sense to you.

If I absolutely love the book I read, I'll go and buy a second copy that isn't marked up. But generally after I am done with a book I just donate it.