Harper Lee characterizes Dill primarily through descriptions of his physical appearance. When we're first introduced to him, one of the first things we find out about him is how incredibly small he is. When Scout casts eyes on Dill for the first time, she observes that he isn't much higher than the collards. Even though Dill's a year senior to Scout, she still manages to tower over him. It's notable that Dill has to climb under the fence to meet Scout and Jem as he's too short to climb over it.
Scout then gives us a detailed description of Dill's hair and clothing. With his snow white hair stuck to his head like duck fluff, and his blue linen shorts buttoned up to his shirt, he gives the impression of a boy much younger than his age. And that little cowlick in the middle of his forehead must make him look like a toddler. Our initial impressions are further confirmed by Dill's boyish sense of fun, which makes him especially good at coming up with all kinds of wonderful games for him and the Finch children to play.