In the chapter "People" from Aspects of the Novel, E. M. Forster talks about the development of characters in a novel.
He starts by comparing the historical characters in history books to the fictional characters in novels. In history books, the reader can only deduce the meaning from what is said and observed by people who were actually there. In novels, the reader can deduce meaning through what the writer imagines the character thinks and does. In this respect, the author is more or less in control of what the reader takes away from his creation. He can give away or hold back as much information about the character as he wants, "providing," Forester states, "he seems to know everything about them."
To know everything about their characters, Forester states writers have to know the five main facts in human life: birth, food, sleep, love, and death. These are often five things that we only know about ourselves. Even then, we don't usually remember our birth and don't know much about death beyond observation. So in this regard the writers don't have to be realistic; they just have to know their characters well enough to be "imaginative about them."
As Forster states at the end of the chapter,
[the novelist] can post his people in as babies, he can cause them to go on without sleep or food, he can make them be in love, love and nothing but love, provided he seems to know everything about them, provided they are his creations.