There are two main approaches to providing a Site Directory feature:
A central list that has to be maintained
Using a search-based tool that can provide the information dynamically
With a list-based Site Directory, a list is provisioned in a central site collection, such as the root of a portal or intranet. Like all lists, site columns can be defined to help describe the site's metadata. Since it is stored in a central list, the information can easily be queried, which can make it easy to show a listing of all sites and perform filtering, sorting, and grouping, like all SharePoint lists.
It is important to consider the overall site topology within the farm. If everything of relevance is stored within a single site collection, a list-based Site Directory, accessible throughout that site collection, may be easy to implement. But as soon as you have a large number of site collections or web applications, you will no longer be able to easily use that...