Character is defined through two distinct types of characterizations: direct and indirect characterization. Direct characterization is evident through the author defining exactly how a character is. The author hides nothing--naming the character through direct (explicit) details. For example, a direct characterization (from Edgar Allan Poe's "The Black Cat") exists when the narrator openly states "From my infancy I was noted for the docility and humanity of my disposition" Here, the speaker openly provides a characterization of himself for the reader (he is mild and humane).
Indirect characterization, on the other hand, is where the author provides information regarding a characterization through defining actions, interactions, or dialogue from which a reader must draw conclusions. In this, a reader must infer who a character is based upon the situations defined by the narrator or author. For example, the author openly states that he is not "mad." As the reader progresses through the story, he or she may come to challenge this statement. A reader, under these circumstances, should question the narrator's mental stability. Is a character who goes to the extent this narrator goes to really sane? The answer to this question provides an example of indirect characterization.