Authors use methods of direct and indirect characterization to develop the characters in their texts.
Methods of direct characterization are described as moments when the narrator (through the author) delivers information to the reader about a character. For example, the narrator giving specific adjectives that describe a character would be considered direct characterization. In these situations, the reader does not have to draw conclusions to access information--the author has directly supplied information about the character.
On the other hand, indirect characterization requires the reader to use clues in the text to draw logical conclusions about a character. Indirect characterization is used more often in texts, and the range of methods is great. Some types of indirect characterization include actions and behavior, reactions from other characters, speech and dialogue, family background, and moral values. All of these provide clues to the reader to help the reader determine the personality of the character.
Ways in which an author develops a character are with physical description, behavior, insight into the character's thought processes through dialogue or narration, and insight through the opinions of other characters in a story.
An example of at least a few of these means of character development may be found in The Great Gatsby (Fitzgerald), with the description of Gatsby's smile:
He smiled understandingly - much more than understandingly. It was one of those rare smiles with a quality of eternal reassurance in it, that you come across four or five times in life. It faced - or seemed to face - the whole external world for an instant, and then concentrated on you with an irresistible prejudice in your favor. It understood you just as far as you wanted to be understood, believed in you as much as you would like to believe in yourself, and assured you that it had precisely the impression of you that, at your best, you hoped to convey (52-53).
This passage, which describes a physical action without including any physical details, tells us much about Gatsby. If we find Nick to be a credible narrator, it gives us insight into Gatsby's mind and heart, and tells us much about his effect upon people. One aspect that always stands out to me in this passage is how Fitzgerald begins to set the stage for Gatsby being a character who represents the American Dream. Only a character of great hope and optimism could smile like this.