Okay, so you've learned to write decent, perhaps even lovely, descriptive sentences. You've learned to string them into paragraphs in such a way that one thought logically follows the next. You understand POV and you're getting the hang of dialogue. Let's talk about characterization.
Since having written this page some time ago, I recently discovered Getting into Character: Seven Secrets a Novelist Can Learn from Actors by Brandilyn Collins. Using proven acting techniques, the author shows a step-by-step way to create characters. This really works. I can't recommend this book enough. Get it, read it, learn the process, and I believe you will be able to create your own interesting characters .
I've read several books on characterization. Most of them are pretty useless. I recently read a book which stated, as many do, that you need to be able to create characters that are so real and believable that the reader will know them better than they know real people.
This is nonsense. Pretty nonsense, but still nonsense. We have all had the experience of meeting a stranger. Their looks tell us a lot—the way they hold themselves, the way they talk, their facial expressions. In conversation, we may quickly grasp their particular sense of humor. Within an hour of being around them, though we do not know them intimately, we may have a good idea about their personality. We have learned more about that person than we could ever learn from a character in a book because people are more than their looks or expressions or sense of humor; there is what I call their spirit--their persona, that intangible essence.
I have known my wife for many years, but she remains a wonderful mystery to me. I can't always predict what she will do. I have met some great characters in books—Steerpike in Titus Groan, Mr. Micawber in David Copperfield. Mervyn Peake spent several thousand words delineating Steerpike's character, but he is still a thin leaf compared to the layers of characterization present in a living person.
Trying to create characters "better than real people" leads to advice such as "you must create a list of every detail of the character's life: color of eyes, hair, distinguishing moles, what car they drive, etc." I have made the lists and they are, at least to me, worthless. You should list a few of these things when you're writing a novel, so you don't forget a character's hair or eye-color, but such details don't bring a character to life. Lists such as "What is the character's backstory?" and "What does the character want more than anything?" are more useful. Writing the Breakout Novel by Donald Maass has an excellent section on this and other aspects of writing.
The best advice I've found on characterization is from E. M. Forester's Aspects of the Novel, a book well-worth reading. Forester writes of Flat and Round Characters. A flat character is one who only has one or two personality traits. In the old Leave It to Beaver TV show, Eddie Haskell was a flat character. He had only two traits as far as I remember: he was sneaky, and he was two-faced around adults. Eddie never did anything outside those traits—nothing surprising. In effect, Eddie wasn't a real human being—he was one-dimensional. His purpose wasn't to be multi-layered. A round character can take actions that surprise us—but even as we are surprised, we think, "yes, although I didn't expect this, it is within this person's character for them to have done it."
Both round and flat characters are necessary in a novel. Most of the characters in The Lord of the Rings are flat characters. Try to imagine sitting at a table with Aragorn: what would he say? What kind of jokes would he tell? I have no idea. (That's true of a lot of characters we meet in books, by the way.) Sam is initially a flat character—the Loyal Servant--who transcends his flatness over the course of the book to become a round character, so that for those who read the book more than once, it is Sam and not Frodo who we love best of all. His loyalty moves us. And we can imagine what he would say at table and the jokes he might tell.
In The Worm Ouroborus, Lord Gro is perhaps the only round character. A traitor to his own people, he is fiercely loyal his new masters. Yet, in the end, we discover that something in his nature always leads him to betray those he serves, even when the betrayal leads to his own destruction. He doesn't understand his own motives. When the betrayal does come, we are surprised, but see that the decision was inexorably bound to his personality.
These days, characterization is king in fiction. Whereas plot tended to drive SF and Fantasy novels in the 70's and 80's, characterization has become more important. This leads to a lot of inner dialogue. Inner dialogue is useful, so long as it illuminates character. Don't use it to recap the plot, as I've seen in several recent fantasy novels. You aren't illuminating character just by having the character think about what has happened; you must portray their mental reaction to what has occurred, or what they fear may occur.
In reader reviews of my novel, The High House, some said the characterization was brilliant; some said they were cardboard. My only explanation for the differing responses is that I didn't use any inner dialogue, and most of my characters were flat. Enoch, I think is a round character—at least in my head. Two of my influences are Ursula LeGuin and Roger Zelazny, both of whom sometimes use a cinematic writing style, describing only what could be seen, as if following the characters with a camera. I like that style of writing--it's challenging and more like real life, since we can't read other people's thoughts, but it has disadvantages and has definitely gone out of style, so I've moved away from technique except in certain scenes where I want to make the viewpoint character more heroic, which can be done by staying out of his thoughts, thus creating distance from the reader.