During the Oktoberfest, all Hotels will be at almost full capacity. Don't think about showing up with something booked, or you will end up having to sleep in the park!
Whether you book a year in advance or a week before, you are going to pay substantially more for a bed than at other times during the year. It is of course better to book early though, so you at least have a choice of Hotels to stay at.
The best location to look for Hotels is around the Hauptbahnhof area (Main Train Station). It is possible to walk to the Oktoberfest from here, and because it is the main train station, there is quite a bit of choice in this area for all budgets.
When all the Hotels in the center of Munich are taken or are too expensive, it is sometimes possible to find a hotel a little outside the center.
Towns like Dachau, Allach, Riem, Garching, Unterföhring, Starnberg and even Freising have good connections to Munich and will not be as full as central Munich hotels. Because the Oktoberfest tents shut reasonably early, as long as you don't party afterwards, you will still be able to get a train back to these towns when the night is over.
If you are on a budget and don't mind roughing it, camping is also an option. The most popular site is near Thalkirchen in the south of Munich. This is where many of the tour groups like Contiki put their guests. The camping grounds are near the U-Bahn station Thalkirchen on the U3 line.
By using the Hotel search feature in your Munich Travel Guide, you can find information and pictures of Munich Hotels, as well as check live prices and available and even book your hotel all on your device.