Gemara

Rava: A person is obligated Livsumei (to become drunk) on Purim until he cannot distinguish 'Arur Haman' from 'Baruch Mordechai.'

Rabah and R. Zeira ate their Purim Seudah together. Rabah fulfilled Livsumei, and slaughtered R. Zeira. The next day he prayed and R. Zeira returned to life.

The next year, Rabah invited R. Zeira to eat with him again. R. Zeira declined, because miracles do not always happen.

Rishonim

The Rif and Rosh (1:8) cite Rava verbatim.

Ran (DH Gemara): R. Efrayim learns from the slaughter of R. Zeira that it is improper to get drunk. The teaching that one must get drunk is rejected.

Korban Nesan'el (10): Rashi says that Livsumei means to become drunk. However, the Targum of getting drunk is 'Revayah'. Livsumei connotes becoming merry through drinking. Rava says to drink up to but not including the point where he cannot distinguish. Rabah was poor and was not used to drinking wine, therefore he accidentally became drunk and slaughtered R. Zeira.

Rambam (Hilchos Megilah 2:15): One should drink wine at the Purim Seudah until he gets drunk and falls asleep amidst drunkenness.

Hagahos Maimoniyos (2): This is a Mitzvah, but it is not Me'akev.

Poskim

Shulchan Aruch (OC 695:2): One is obligated Livsumei on Purim until he cannot distinguish 'Arur Haman' from 'Baruch Mordechai.'

Rema: Some say that he need not get so drunk. Rather, it suffices to drink more than he normally does and sleep. While sleeping he cannot distinguish. It does not matter whether one does much or a little, as long as he intends l'Shem Shamayim.

Source (Gra DH v'Yesh Omrim): Pesachim 113b says that one of three people whom Hash-m loves is one who does not get drunk. "Ki Yiten ba'Kos Eino..." - anyone who eyes his cup (loves to get drunk) considers all Arayos to be permitted (Yoma 74b).

Beis Yosef (DH v'Chasuv b'Orchos): Orchos Chayim says that Livsumei does not mean getting drunk, for that is the worst Aveirah. It leads to murder, Arayos and other Aveiros. Rather, one should drink slightly more than he normally does.

Darchei Moshe (1): He should lose the ability to calculate that the Gematriyos of Arur Haman and Baruch Mordechai are the same. Some say that there was a Piyut in which we say Arur Haman after some stanzas and Baruch Mordechai after others; one should drink enough to sometimes err about this.

Bach (DH v'Tzarich): Tosfos asks that this distinction is very easy. Rather, he must lose the ability to properly say 'Arur Haman Baruch Mordechai Arurah Zeresh Beruchah Esther Arurim Kol ha'Resha'im Beruchim Kol ha'Tzadikim.' Some say that he gets a bit drunk, and mistakenly says 'Baruch Mordechai Arur Haman'. It appears that Rava indeed obligates getting as drunk as Lot. The Gemara brings the slaughter of R. Zeira afterwards to show that Rava is rejected. Nevertheless, one should drink much more than usual to become merry and mildly drunk. He can reach the point of being unable to speak in front of the king, as long as he does not lose his mind.

Note: If Rava (who was after Rabah) held that one should get drunk in spite of that episode, it is difficult for Rishonim to disagree. The Ba'al ha'Ma'or and some texts of the Ran says that Rabah (not Rava) taught that one should get drunk. Presumably R. Zeira did not accept Rabah's teaching.

Be'er Heitev (2): When one drinks more than a Revi'is he is befuddled.

Kol Bo (Sof Siman 45): One should drink slightly more than normal so he will greatly Mesame'ach Aniyim, console them and sincerely address their concerns. This is the ultimate Simchah!

Sha'arei Teshuvah (2): If one has a weak nature or becomes drunk he should not drink too much. R. Yehudah did not drink on Purim because wine harmed him.

Yad Efrayim: Drinking is to enhance appreciation of the miracle. Clearly, Rava teaches that one must stop before losing ability to distinguish, for at that point one loses grasp of the miracle. The slaughter of R. Zeira is brought to show the danger of passing this limit.

Mishnah Berurah (4,5): One should praise Hash-m so much b'Simchah that he loses sight of which is greater, the downfall of Haman or the aggrandizing of Mordechai. It is proper to conduct like the Rema.

Bi'ur Halachah (DH Chayav and DH Ad): Even though drunkenness is a great pitfall, we are commanded to do so to remember the miracles of the demise of Vashti and Haman, each of which came through a Mishteh. We are not commanded Simchah of frivolity, rather, of delight that brings to Ahavas Hash-m and Hoda'ah. It must be Simchah of Mitzvah; if one will not be careful about Netilas Yadayim, Birkas ha'Mazon, Minchah or Ma'ariv, or will act frivolously, it is better not to get drunk.