Watch "Wishes" from the hub on Main St if you want to see the full effect of the show and the color changing on the castle. Anywhere in that circle, over by Crystal Palace, over by the entry to TomorrowLand should be a good site as long as you have a clear line of vision. Last week we watched from FantasyLand, which was AMAZING, as the firecrackers go off literally over your head! You feel like you are in the middle of the show! We also watched them from the 15th floor observation deck of the Contemporary as we had an adr at California Grill.
In Epcot, we often watch Illuminations from Germany, Italy, or Japan. Once again, just make sure you have a clear line of view. We never stake out seats early; it's pretty easy to find a spot to see Illuminations. Last week we watched from the deck outside of TEppan Edo as we'd just finished dinner as the show was starting.