Laurie's mother rues the fact in the first paragraph that he is growing up and going off to school. He has given up his short pants for long ones. He is now a little boy, no longer a baby. She says,
"I watched him go off the first morning with the older girl next door, seeing clearly that an era of my life was ended,...
Shirley Jackson cues us in to the type of psychological reaction Laurie is having by his words and actions. On his way to the bus, he swaggers.
my sweetvoiced nursery-school tot replaced by a long-trousered, swaggering character who forgot to stop at the corner and wave good-bye to me
There are two common analytical interpretations of "Charles." The first is that Jackson has presented a psychological study of a young boy who is conflicted about the change real school brings to his life after not having had or caused any trouble in nursery school. He is conflicted because he wants to grow up and be bravely independent ("[he didn't] stop at the corner and wave good-bye to me"), yet he wants to retain the happiness and content of his first years. His conflict leads to maladaptive behavior and to the creation of a separate persona that assumes responsibility for his inability to adapt to life changes. The fact that his teacher says "but now he’s a ﬁne little helper" confirms Laurie's conflict and initial psychological inability to adapt. This psychological analysis is also confirmed when Laurie seems to be overwhelmed by the persona that maladaptively breaks out:
"Charles," he shouted as he came up the hill; I was waiting anxiously on the front steps. "Charles," Laurie yelled all the way up the hill,..."
The second analysis, which has less textual support, interprets Laurie as an intentionally deceptive and trouble-making little boy who breaks out into his real behavior on the first morning out the door to school and who willfully covers up his real self by deliberately substituting another name for himself (as opposed to developing an alternate persona). This analytical approach also casts the story as more of a psychological study of the mother, who in this analysis is interpreted as quite deluded and inadequate while suggesting she might be the cause of all the psychological trouble. The following represents this second analytical approach.
When Laurie returns from school that day, he is demonstrating behavior that is inconsistent with his earlier "sweetvoiced nursery-school" self:
[he was] insolent to his father, spilled his baby sister's milk, and remarked that his teacher said we were not to take the name of the Lord in vain.
This might indicate to the reader that Laurie is not the sweet little boy of his mother's description. Laurie, in order to avoid getting in trouble, fabricates a classmate named Charles and regales his parents with horrible tales of Charle's behavior.
That Monday, Laurie comes home late from school. He again blames Charles. Evidently Charles had created such a noisy ruckus in the classroom that the first grade teacher had to send in one of her students to tell the teacher they were too loud. The teacher decided to punish Charles by having him stay after school. The reason Laurie was late was because of the disturbance Charles caused:
"Charles had to stay after school. And so all the children stayed to watch him.”
Children do not stay after school to watch someone who is being punished. Obviously Laurie's mother does not know this. So Laurie told his mother that he was late because he had to stay and watch Charles, a fact that does not seem to disturb her. Of course, we later find out that Laurie is Charles, and the real reason he stayed behind was because he was being punished for his behavior that day.