Personally, I can't stand answering this question, because I always feel like the recruiter is conducting some kind of psychological test on me. Even for people with less (over)active imaginations, however, this open-ended question causes problems. Many people freeze like deer in the headlights, either because they don't know where to begin, or they lack confidence in their ability to sell themselves.
In brief, "yourself" means yourself in a career/professional sense, not in a personal sense, though your personality should show through. In telling your story, don't sound like you're reciting the highlights of some historical figure. You want to sell your education, skills, experience, and personality – part of which is your interpersonal and communication skills.
Here's how to approach it: