The first, best, and most important thing to learn about writing a novel is that there is no one way to do it. Novels have been written in a thousand different ways. One person’s style and approach can be radically different than another person’s and yet still produce a good novel. There are people who plot out every detail before they start writing. Some novelists start with an outline that can stretch for several pages. One writer might write down each possible scene on an index card. Another writer might spend all of his preparation time creating elaborate backgrounds for the characters. Another writer might just start writing, with no idea in advance of where the novel is going and how it will get there. None of these writers would be wrong. Each approach can result in an excellent novel.
Some writers fret over every single word of the first draft. Their choices are so careful and exact that second and third drafts look almost exactly the same as the first. Some writers just tear through their first draft as quickly as possible, unconcerned with the possible messes they have created and sure that they will fix every problem when they start editing. The end result of this process may look almost nothing like the original. Again, neither writer is correct nor incorrect. Different styles work. Different approaches work for different people.
If you are looking at writing for Nanowrimo, however, there are some approaches that may be more advantageous. For example, because you must create your first draft in a single month, sweating over every single word of the first draft is probably not a good idea. That approach may work well when you have six months or longer to produce a draft, but it is virtually impossible to be that exacting and produce a 50,000 word or longer draft in a single month.
Writing off the top of your head also has its pitfalls. If you attempt this, at the hurried pace of Nanowrimo, and you could find yourself unable to generate sufficient action or create character arcs or plots that go nowhere. It can lead to a lot of frustration down the line. While the rules of the process are that you need to write the draft during the month of November, there is no reason why you can’t prepare as thoroughly as possible before you reach the start date. You can create a detailed outline, an in-depth character study, research any subjects you plan to write about, and create descriptions of the real or imagined places that will be the settings for the action.
You can prepare as thoroughly or as lightly for the process as you want, but I for one want to take advantage of the advance time so that I can be as ready to write come 12:01 November first as possible.