Mostly word of mouth I imagine. But what about friends and acquaintances at the periphery?
I guess someone could contact Facebook, to get my profile updated. I'm sure they've got some established procedure for dealing with this kind of thing. What do they do though? Leave your page intact and just put "DECEASED" at the top? Nah, more likely they take the whole thing down. It would be weird to have a dead person in your Facebook friends.
Least appropriate ways to communicate someone has died (in order of increasing inappropriateness)
1. Facebook status update
2. Tweet (or RT)
3. Txt msg
4. Singing telegram
5. Writing it in the dirt on someone's dirty car
All joking aside- I have lived a very blessed life thus far, in that I've never had to attend a friend's funeral. (knock on wood)
Let's keep it that way!