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.