Charles Baker Harris, more commonly called Dill, is often ignored by his parents. Each summer he is sent away to visit his Aunt, Scout and Jim’s neighbor Rachel Haverford. While being ignored by his parents does not necessarily lead to neglect, like any young child he grows upset and craves their attention. Because of this neglect, and his strong background in movies, Dill creates stories about his family and the times they spend together. His stories are his way of creating the childhood he wishes he had. So, when he comes to visit his aunt, he has a new audience to share his stories with.
There are several reasons as to why Dill makes up so many stories about his parents and life in general. One of the main reasons Dill creates these elaborate stories is because he feels inadequate. Unlike Scout and Jem, who have a loving, accomplished father, Dill is fatherless. Dill feels inadequate in comparison to Scout and Jem, who are privileged to share many experiences with their father. In order to feel better about his difficult situation, Dill finds it gratifying to make up stories that shock and impress the Finch children. Dill is also a relative newcomer to Maycomb and wishes to fit in. One way of gaining notoriety among his peers is to tell extravagant stories that will hopefully fascinate the other children. Initially, Jem and Scout are awestruck at Dill's fanciful stories, but they quickly begin to question whether or not they are true. Fortunately, Jem and Scout understand and accept Dill for who he is and learn to take his made up tales with a grain of salt.
Also, Dill was based on Truman Capote, who was a close friend of the author, and who was notorious throughout his life for making up such larger-than-life stories.