1. The "true" documentary.
A "pure" documentary is the act of setting up a camera somewhere and then walking away and coming back later to pick it up. Set it up on a busy street sidewalk, turn it on, forget about it and just stand there and talk to your friend until the film or tape runs out. What you capture is an absolute true and pure "documentary" - that which unfolded in real life and real time in front of a camera. You have "documented" that particular slice of life for a certain period of time.
The closest I can think of to an actual pure documentary today is the film in a bank's surveillance camera, but even that is tainted due to the fact it is not running at real speed and therefore leaves time lapses, however short, to accommodate the size of the camera and it's limited capacity.
Perhaps a "real-time" camera in the halls of a hotel which are sent on a closed circuit to a security room is a better example. Sometimes, those are not even recorded on film or tape though.
2. The next step "down" in the hierarchy of documentary films are the films that consist of honestly edited footage which has been obtained in a documentary manner. These are what most of the documentary films you see today are, the most common.
These are produced by analyzing your subject or event and making a list of scenes you want to go out and capture. This requires that you know your story or event thoroughly, and have determined what elements an honest portrayal of that subject would consist of. Let's say I wanted to "document" San Francisco. Assuming I didn't want to go into great interpretive depth, my list of things to film would include the famous structures and streets and water and normal events that take place in San Francisco. I would go out and set my camera on a tripod and take some footage of the Golden Gate Bridge (if only to have viewers know where the film was taking place); then Market Street, a cable car, Coit Tower, maybe. Alcatraz footage would be obligatory as would Fisherman's Wharf and maybe the Tenderloin District. Maybe the Bay Bridge and sports stadiums. City Hall. Chinatown. Whatever.
Then I would come home and begin the VERY long and laborious process of post production: making my film out of the recorded scenes I had shot. Add interviews in the background and some music. Seagulls. The sounds of a crowd at a baseball game. Whatever. Hopefully the result would edify an out-of-town viewer about what a little bit of San Francisco tastes like.
That's a small, basic project. A huge project might be Ken Burns' documentary of the American Civil War, or the history of Baseball. Those are big-time, big-money projects that require investors. The key here is to tell the story truly, almost dispassionately. No axes to grind, no sponsors to please.
How about if someone wants a video of their wedding? Is that a documentary film? Sure. You set up the camera so you can see the audience, see the bride coming down the aisle, see the newlyweds dancing at the reception. And on-and-on ad-nausium. And that it is, make no mistake about it. But a documentary? Sure. You go home and edit out Uncle Charlie and his big stinky cigar pointed at the camera and Aunt Doris puking in the punch. Bingo. Documentary. (At least by this particular definition.)
3. The propaganda film.
Think Nazi Germany and Josef Goebels portraying the low down animal character of the Jews. Think of Michael Moore filming only the things that support his agenda and purpose, sticking the camera needlessly into the pathetic face of a dying Charlton Heston, or selecting snippets of conversation from the mouth of the CEO of General Motors. Like that. Now you know what a propaganda film is. However, if you take your propaganda to Cannes like Michael Moore does, you get a Golden Palm for an "Important Documentary, " just as if it really WERE a documentary. Whatever. The key to a propaganda film is to only present one side (YOUR side) and to leave out stuff that might diminish the sensationalism of your argument.
4. Reality TV.
This type of work is very common nowadays. It is one more step away from a "true" or "pure" documentary. Basically, in Reality TV, you stage events and scenes, but you don't rehearse. You take a non-professional "actor" and say, "Please ride your bike down this hill and smash into that truck over there" And then you film him as he smashes his bike. Maybe you leave the camera running until the ambulance has left. You collect several of these events and then you put together a film called "Jackass 2003" and sell it to MTV. I guess it is SORT of a documentary. The action is real enough.
I prefer number 2. How about you? I know, I know - Jackass 2003 for this crowd. Ha!