I think 'we' have two ways, essentially But with all things magical, over time it gets distorted.
There is 'heaven and earth'.
In the heavens, directions come from the elements of astrological signs. Also , in the past, elements were assigned to the 'Four Royal Stars' that marked the seasons.
On earth it comes from local environment (and even so with the 4 Royal Stars, seasons vary along with the environment ... where I am, we get rain in summer / autumn, other places in winter. And that varies , eg. in the north hemisphere, fire, the path of the Sun is in the south, here, in the north. Some Pagans read Euro Wicca books and set up their circles down here according to the north hemisphere
. )
In my environment , the biggest ocean, the Pacific, is to the east - water, the oldest land mass and biggest island in the world is to the west - earth, the Sun in the north for fire and southerly winds blow a lot so air there - simple ?
Nah .... people have argued about this for ages. One reason being, there is 'Kabbalistic direction'. As if you were 'standing' on a place on the Tree of Life and the sephiroth around you have elements assigned - usually in connection to the '4 winds' ( the LBRP directions) . But it can easily be shown this is a local arrangement as well - if you are on the east coast of the Mediterranean , the homeland of Kabbalah. *
In short IMO, it doesnt matter, with 'directions' unless you are working in a context of localised 'forces' .... otherwise, whatever.
I feel the 'order' is more important ; with the 4 elements and their correspondences
Fire first , then water, then air and lastly earth.
(Some have made it ridiculous .... Like DuQuette {again} ; in one of Crowley's rituals he gives another variant of 'directions' ( Liber Reguli if I remember rightly ? ) DuQuettes information on it is it is heliocentric .... and one is supposed to imagine oneself in the position of the Sun ....... upside down .
Upside down in the sun .... to make the directions 'fit' ..... whatever
[ Some people have challenged me on this; I asked them if they were doing a ritual on the beach and had a circle drawn and the east quarter (here) was a few steps away from the ocean, and they wanted some water for their ritual, would they really make water in the west, up the beach and call out to the inland to invoke water ?
It wasnt answered, of course ... just an attempt at a counter ; "Well, what about when you do a ritual at home by the river and at at your place, on the river beach the water is to the west, what do you do then ?"
"I make water in the west, of course ... because ... there it is ! "
'Thats crazy ! You cant move the elements around like that !'
"Oh ! Cant I ? "
* ETA (cross post with Aeon ) ... Aeon makes a point about position and changing elements as well, but this time in a sort of internal landscape. This can be helpful if you understand the map ( ToL) really well, then one can 'shift places' according to the 'scenery' ; if one can imagine Tiphareth 'below you and Geburah to your right, then one can 'be' in a position and orientation .... just as if one looks out the front and rear window of a car to familiar landscapes and identify position .... its a visualisation tool. And this is similar to the changing 'view' in the environment , depending on your hemisphere and location.
(If I close my eyes and imagine the sun setting over the sea - water in the west , I am transported back , in memory, to when I lived in Western Australia ,)
But I doubt such directional variations are useful unless you doing that type of work.)