From the variety of replies it seems clear that the answer is āany and all ways that you like to work to make something you are happy withā⦠
I love stereo recording and multi-tracking, but always do live performance takes. Others have said that straight to stereo is their choice⦠or recording patches and then using them in finished piecesā¦
In the end maybe the modular isnāt all that different than other instruments? Sometimes you can treat it as one instrument, sometimes as a whole ensemble-in-one. Live bands of all sorts often record straight to stereo⦠but others multi-track like crazy with single takes or lots of overdubs. Maybe weāre overcomplicating things? 
I love that we all do different things and treat it in different ways, so much to learn from each other and our approaches.
This is something Iāve heard from many improvisors (jazz, new music, experimental, etc). A lot of this music really lives in the performance, and the players play to perform more than to record. If you donāt live in a place with a modular community, maybe thereās an experimental music community?
Iāve heard my more serious music friends refer to forms of improvisation as spontaneous composition⦠As you say, thereās definitely a gradient between the extremes.
This paper has some good high-level points about where the two overlap and differ - http://music.arts.uci.edu/dobrian/CD.comp.improv.htm
In my music work Iāve tended to think about a session as the real-time performance. Sometimes itās improvised, sometimes you can perform the same piece multiple times or in different ways/interpretations. The piece is what youāre playing, or in the case of improvised music it can be the document of the output. Unless youāre doing completely free improv then thereās probably some sort of āpieceā that youāre performingā¦