Specifically, if you're demoing an iPhone/Android app, you should probably have a textual description, which then links to screenshots, which might also include some video/screen capture. Then, link to an install URL. Essentially no one is going to casually install a random iPhone, Android, FB-login, account-creation website, Facebook, etc. app just to try it out, especially in the earlier screening stages. But at the same time, having a "live" demo people can use as soon as they're interested is ALSO great. So, the best way is probably something which allows progressive engagement.
(the YC application says to not require a login, just to provide a special URL, but for something like a mobile app, that advice is a little outdated and non-specific.)