Best of all time.
While the talent pool was diluted because of segregation and a lack of international scouting, it was concentrated because there were fewer teams and other sports were less popular among top US athletes. The latter more than makes up for the former in terms of the concentration of talent. What that means is that the average MLB player in Ruth's time was better for their era than the average MLB player today.
Now of course conditioning and sports science has improved dramatically. If you took Ruth as he was and plopped him onto a modern field, he would lose something, but you've got to be fair and consider that if he were playing today, he'd get those same advantages. The best assumption is that the top athletes then are as good as the top athletes now, the average athletes then are as good as the average athletes now, etc. While the concentrations may change, if you look at the top 250 white American baseball players (there were about 400 major leaguers, but the bull pen and bench didn't get used much, 250 starters carried the bulk of the work load), including guys who currently play football, basketball, and hockey which were not professional sports at the time, you'll have some pretty good teams, better than if you expand your pool to include everyone around the world but fill about 4 times the number of positions (twice the teams and a lot more use of bench and bull pen as well as call-ups) and lose the players who prefer other sports.
So considering all of that, the most fair thing is to compare a player to others of their era, who played in the same conditioning and under the same rules (substantial rule changes have affected batting averages, home runs, and many other statistics over time). You can make some allowances for the fact that the average level of play increased with integration and the rise of international scouting and decreased with expansion, but overall, compare a player that rises above others in his era could be great in any era.
Now if you look at anything Ruth did, there are a few others to compare him to, but very few. Sadaharu Oh, for example, holds the all-time home run record at 868 in Japan. While Oh's numbers far out-shined his competitors, as did a few other notable examples, Ruth hit more home runs each year than most other TEAMS. His numbers were completely ridiculous for his era, cementing him as the greatest power hitter of all time. There are certainly better average hitters, though Ruth's average was still excellent even for the era, when averages were generally higher. He had said that he could have had a higher average if he had tried, but he wouldn't have hit as many home runs if he did. There are certainly more skilled fielders and he wasn't particularly fast, but his strong arm made him a good solid right fielder regardless.
Now all of that puts him in discussion. he's clearly the greatest power hitter and in the discussion for the greatest player, but keep in mind that before he came to the Yankees, Babe Ruth was a hall-of-fame caliber PITCHER for the Red Sox. There have been some excellent pitchers who could hit pretty well, but never has there been anyone who combined hall-of-fame caliber pitching with among the best hitting of all time and decent fielding. If he had modern training and conditioning, making him lose the extra weight, he would have been completely unstoppable. As he was, there's no question he was the greatest player of all time.