He traveled extensively and talked with people everywhere he went. Herodotus then recorded these stories, weighed the evidence, and gave them to his audience. He often stressed the moments when he had conflicting tales, which gives tremendous credibility to what he speaks of.
Wikipedia gives this wonderful anecdote:
It was conventional in Herodotus's day for authors to 'publish' their works by reciting them at popular festivals. According to Lucian, Herodotus took his finished work straight from Asia Minor to the Olympic Games and read the entire Histories to the assembled spectators in one sitting, receiving rapturous applause at the end of it. According to a very different account by an ancient grammarian, Herodotus refused to begin reading his work at the festival of Olympia until some clouds offered him a bit of shade, by which time however the assembly had dispersed - thus the proverbial expression "Herodotus and his shade" to describe any man who misses his opportunity through delay. Herodotus's recitation at Olympia was a favourite theme among ancient writers and there is another interesting variation on the story to be found in the Suda, Photius and Tzetzes, in which a young Thucydides happened to be in the assembly with his father and burst into tears during the recital, whereupon Herodotus observed prophetically to the boy's father: "Thy son's soul yearns for knowledge."I simply love the idea of going to the Olympics and reciting your works. I hope some new writer makes this method succeed again.