I've used both. If I write something on there, definitely the Sharpie. It is so much easier to see. If you use a pencil, use a soft-leaded pencil and rub it on from the side it of the lead to make a wide band. To know which belong there, all you need is a band around the egg.
dates they are laid. breed. day of week. i hand turn x and o. i make note on egg if i found cold. if i find inferile egg half way. i mark then candle a few days later to make sure then pull if not developing.
i do staggered hatches. i have 3 sets of call eggs in one bator. i color code each set. they are all a week apart. when i color code sometime i just do little stars of each color.
Too high-tech for me. I write BCM, BSL, Silkie, OE Sp or Bl (splash or blue), Jap, and Duc (d'uccles) on my eggs...that's all I've got to separate right now. I also right the date laid on the side of the egg then the date set on the top of the 'big' end. If they look bad when I candle them I usually just pull 'em. Otherwise I put a ? on it right next to the set date