Characterization is how a writer conveys to the reader the type of person a specific character is. This is often done through physical description: the author will tell us what color hair, eyes, etc, the character has, and give us information about their clothes or any specific physical characteristics that are important. We also learn about characters when the writer provides background narration about them, perhaps outlining some key events from their past or explaining if they are rich or poor. The most important way, however, that we discover what characters are like is through how they act at crucial points in the story. Do they help a person in need or turn away? Do they show courage or do they run? Do they admit to wrongdoing or keep a secret? These actions are more important than words in letting us know the true nature of a character.
In a short story, there will be less character development than in a novel, with the author often only concentrating on communicating one or two traits. For example, in Saki's short story, "The Open Window," what we mainly learn about the niece is that she tells lies and is malicious.