I pinch the area using my fingers (index and thumb) and then take a reading.
It takes practice. When I first started, I could get all kinds of readings. Once I started measuring the same area and pinching correctly, my readings are right on.
The digital version should be the same as the manual except you just don't have to read the mm settings. At least that is what it looked liked to me.
But I have heard some complaints about that version in other forums. Not a lot but some. Nobody seems to complain much about the regular plastic Accu-Measure style fat calipers.
Those are pretty much what I recommend all the time. Cheap and easy to use.
Danmirage
did a good review of various pinch site tests here. As you will see, he did all kinds and they don't vary all that much.
Many fitness pros feel that if you are properly instructed and with enough practice, a 1-site pinch test is as accurate as any other multiple site test or fancy expensive tests!