An author can use either direct or indirect characterization to describe a character. When an author uses direct characterization, he is telling you about the characters. When he uses indirect characterization, you learn about the characters indirectly, through what they say and do and what other characters say about them.
For example, when the narrator describes the characters, this is direct characterization. Characterization might describe either physical or personality traits. Here is a direct characterization of George.
The first man was small and quick, dark of face, with restless eyes and sharp, strong features. Every part of him was defined: small, strong hands, slender arms, a thin and bony nose. (Ch. 1)
This is direct characterization because it tells you exactly what he looks like.
On the other hand, here is some indirect characterization of George.
George looked sharply at him. "What'd you take outa that pocket?"
"Ain't a thing in my pocket," Lennie said cleverly.
"I know there ain't. You got it in your hand. What you got in your hand- hidin' it?" (Ch. 1)
This shows that George knows how to read Lennie well, and from his interaction with Lennie we learn many things about George. We learn that, despite the fact that he sometimes loses his temper, he is patient and patriarchal. He looks out for Lennie, such as in this instance. He knows that Lennie might pick up dead things like the mouse, and he has to protect him from it. He acts more like a father or older brother than a traveling companion.
The mix of direct and indirect characterization used in this first introduction of George tells us a lot. First of all, George is smaller than Lennie but he is obviously in charge. Lennie needs looking after. He is big, but he is not quite right in the head. He respects George, but more like a child does a parent than man to man. We learn all of this both directly and indirectly, through Steinbeck's excellent descriptions, what the characters say to each other, and what the characters do.
In this story of two men who go around together during the Great Depression, the narrator often hangs back and tells the story without judgement. Indirect characterization allows the story to unfold, with the characters telling the reader about themselves. Yet when the narrator tells the reader directly about the characters, that is when we should listen, because we can get some extra insight.