alternate term: character development
“The creation of imaginary persons so that they seem lifelike.
“There are three fundamental methods of characterization: (1) the explicit presentation by the author of the character through direct exposition, either in an introductory block or more often piecemeal throughout the work, illustrated by action; (2) the presentation of the character in action, with little or no explicit comment by the author, in the expectation that the reader can deduce the attributes of the actor from the actions; and (3) the representation from within a character, without comment by the author, of the impact of actions and emotions on the character’s inner self.
“Regardless of the method by which a character is presented, the author may concentrate on a dominant trait to the exclusion of other aspects of personality, or the author may attempt to present a fully rounded creation. If the presentation of a single dominant trait is carried to an extreme, not a believable character but a caricature will result…On the other hand, the author may present so convincing a congeries of personality traits that a complex rather than a simple character emerges; such a character is three-dimensional or, in E.M. Forster’s term, ‘round’…
“Furthermore, a character may be either static or dynamic. A static character is one who changes little if at all. Things happen to such a character without things happening within…A dynamic character, on the other hand, is one who is modified by actions and experiences, and one objective of the work in which the character appears is to reveal the consequences of these actions” (Source: Harmon & Holman, 89).
The term character-driven is sometimes used to describe a work in which character seems more important than plot.