This is one of those topics that can be contentious. There are so many tools available to the modern writer that it can be overwhelming. I can’t promise you that I’ll answer all your questions. However, I think I can provide you with some valid options and, hopefully, help you make an informed decision.
First, when I refer to writing tools, I mean things that help the writer get a story from their head onto the page. Also, I’m not necessary endorsing any particular tool. I’ll cover the ones I’ve used over the years and offer suggestions based on my experience.
Pencils and Pens
Why not start off with a nod to old school writing tools? There’s something to be said for writing the way writers used to do it. To me, writing on paper with a pen or pencil is more organic. It makes me feel like Hemingway or Faulkner and that I should be sitting in a cafe somewhere sipping Cuban coffee.
I also feel more connected to the words on the page when I write freehand. Sure, my hand gets tired much faster than my fingers so when typing, but that doesn’t deter me. If you’ve never written this way I suggest you give it a try. I doubt it’s going to change your life, or your preferred mode of writing, but I think you’ll find it fun and engaging.
Audio Recording
No, that’s not a typo. I’ve read of several authors who never put pen to paper. Instead, they carry a tape recorder or digital voice recorder and simply narrate their story. Later, they’ll either transcribe it themselves – typing it into their computer – or have an assistant do it. Once it’s on the PC (or Mac), they can edit to their heart’s content. 
I’ve never tried this, but it sounds interesting. I know that I often work out stories in my head while I’m doing something like taking a walk with the dogs or fiddling about in the backyard. In a way, it’s sort of like telling myself the story. So it makes sense that I could carry a voice recorder with me and talk it out stream-of-consciousness style.
My only concern would be the neighbors thinking I’m weirder than they already do.
Also, keep in mind that most smartphones and tablets come with voice recorders built in. All you have to do is transcribe it later. Or pay someone to do it for you.
Computer Software
Honestly, there are far too many writing software options out there for me to adequately cover them all. However, I will tell you about a few that I use, and have used, and what I think about them.
Obviously, there’s Microsoft Word and Apple Pages. Both are fully-capable word processors and both are free (Pages comes free with most Apple devices; Word has paid versions and a free online version). I tend to use Pages more since I write on a MacBook, but I’ve used Word almost as much in office settings.
I think they both have their pros and cons, but for fiction writing I really don’t like to use either one. I find them to offer too many options and sometimes dealing with formatting can be a pain in the ass. When something on the page doesn’t line up correctly I end up spending WAY too much time trying to figure it out.
One of the nicer, all-purpose writing programs is Scrivener. It’s not your ordinary word processor. It’s incredibly robust and designed to be used by writers. Scrivener comes with templates for novels, short stories, scripts, and even poetry, and it’s a great tool for formatting ebooks.
However, much like Word and Pages, I find it distracting to write with when I’m working on early drafts. Again, too many options, too many bells and whistles. I often use it towards the end of my writing arc, for laying out short story collections and getting my work ready for print. I’ve been using it for years and recommend that every writer have a copy of this software on their hard drive.
Probably my favorite writing program is called FocusWriter. This is my go-to for first drafts, second drafts, everything up to the final. It’s an incredibly clean interface and you can set it so there are no distractions, no tool bars, no buttons, no pop-ups. Just you and the blank screen.
The other cool thing is that it has some simple customizations to help make your writing experience more engaging. For example, it offers a couple of different themes for the screen. I use the solid black with green font color…sort of like an old computer monitor. It also keeps track of your word count and has a spell checker.
The best part, however, is that you can set daily goals for yourself. You can set it for minutes or number of words, and the program will tell you when you hit that goal each day. I use this when I feel I’m slipping out of my routine and it helps to keep me on track.
Oh, and the very best part…FocusWriter is open-source, so it’s free (although I encourage you to make a donation to the developer).
There You Have It
Every writer has their preference when it comes to their writing tools. But I think it’s important for us to try new things every so often. It helps to keep us from getting complacent. Or bored.
For me, I use a variety of tools. I think of writing like other manual labor jobs, like construction. You have certain tools for certain jobs. I use pencil and paper when writing poetry, Word or Pages for business writing, and FocusWriter and Scrivener for fiction.
The change of scenery will do you good. Try a new tool every so often and see how it affects your writing.
RB