There is no best way to draw down, so if you are looking for that, I hope you don't find it because it might be a scam.
I would do the latter thing you mentioned: Have dividends and distributions (if less than 4%) sent as they occur in a cash account like a money market fund or checking account. I would spend or reinvest as needed and occasionally sell whatever was "high" in order to effect rebalancing and withdrawal at the same time.
Some folks don't like to work this way. They like to work in "paycheck mode" where they have an amount automatically sold every month or quarter and deposited into their cash account with some occasional one-time withdrawal for cars, property taxes, vacations, donations to charity, conversions to Roth IRA, etc.
Or perhaps a mix of various methods with an eye to minimizing taxes.
It's all about short-term opportunistic rebalancing due to a short-term change in one's asset allocation, uh, I mean opportunistic rebalancing, uh I mean rebalancing, uh I mean market timing.