Best (DIY): Cheap, Safe, Environmentally Friendly, and EasyThe reason why you have to properly dispose of spent fuel canisters is that they are potentially dangerous. I.e. if there is any gas left in the canister and it is compressed (as done in trash compactors), it can potentially explode. Thus, it is imperative to ensure that there is no fuel left inside the can and to make sure it is safe to crush. To do this, you simply have to vent the can (stick your stove on it, and turn it on). If you hear that fuel is coming out for more than a couple of seconds, you probably don't have a completely empty canister yet. Once you hear no more sound and you are sure the canister is empty, you'll want to remove the stove and poke holes into it. Here you have several options.
In the WoodsIf you're out in the boonies, you can take a sharp object (knife, tent stake, etc.) and pierce the canister. Although there should be no more fuel inside, I would avoid doing anything that may cause a spark (e.g. banging it with a rock) to be safe. You can then crush it by stepping on it, pack it out, and throw it in the nearest recycling bin.
At HomeWhile you can obviously use the same method as above, you can use a bottle opener with a pointy end (like this one). You can then toss it in the recycling bin.
Best (Commercial): Cheap, Safe, Environmentally Friendly, and EasyRecently JetBoil came out with a gizmo called CrunchIt that lets you vent and pierce the fuel canister with one tool. It does exactly the same thing as the steps outlined above, albeit in one neat little package. If you don't already have a can opener that you can use, you might want to consider this one.
Once the canister is vented and pierced, you can throw it in the recycling bin.