For most players, the height at which they tee their golf ball has a direct impact on how well they can drive it. It's possible to tee the ball too low and too high; when it's teed just right, you should get the maximum distance and trajectory on your tee shots.
In general, tee your ball so the bottom of the ball is level with the top of the clubface of your driver or whatever club you are using for the tee shot. At this height, you increase your chances of hitting the ball squarely with the center of the clubface rather than the top or bottom of it. You're also delivering the best trajectory for the shot because you're making contact while your club is swinging upward.
Too Low / Too High
If you tee the ball too low, you risk making contact with the top half of the ball at the point of impact. If you hit the top half of the ball, you may drive it into the ground or give it a severe topspin that results in a shorter tee shot. If you tee the ball too high, your clubface may strike the lower half of the ball, resulting in severe backspin or causing you to drive the ball high, resulting in less distance.
Every golfer tees his ball slightly differently, but most tee their ball according to the club they use. Tee the ball the highest when using your driver and the lowest when using an iron. When using a fairway wood or hybrid to tee off, always position the bottom of the ball even with the top of the clubface.
Depending on the size of the driver you use, not every tee is suitable. If you have an oversize driver with a large clubface, for example, use extra-long tees to ensure the ball sits high enough. If you have a number of short tees in your bag, reserve them for when you're using an iron, fairway wood or hybrid club in the tee box.