I measure just above the illiac crest. Basically I find where the top of my hip bone is and put two fingers on top of that. At the top of the two fingers is where I put the tape measure. It's slightly below the smallest part of my waist. I'm in the AF and we do a waist measurement as part of our biannual physical fitness test, and this is where they measure, so it's not like I just randomly picked this spot :-)
Natural waist for most clothing measurements (most shops will specify). Most health professionals measure a little lower to determine health/cardiac risk as pp described.
When people site measurements like 36, 24, 36 I assume that to be the natural waist.