Above the code and on the same line of code, both. Above the code for explaining how sections will work. On the same line of code for brief notes about the particular line.
For example, if I am illustrating how to do edge detection, I would put comments in before the code talking about the approach. And then within that block I might have a line such as
YourImage = imread('cameraman.tif'); %replace with appropriate filename
to point out something specific about the line. I might even have written above that the user will need to replace the filename, but it helps if I comment right there that it is the line to be changed.
