The correct answer is: the way a character is presented and developed.
Indeed, characterization is one of the pillars of storytelling. There are two types of characterization: explicit and implicit. Explicit characterization involves the explicit description of the moral, intellectual and physical qualities of a character. It can be performed by the narrator, another character or even the said character himself/herself.
Implicit characterization is conveyed to the audience/readers by the use and description of mannerisms, speech patterns, word choice, physical gestures, actions, interactions with the other characters and the physical appearance. It is up to the audience/readers to interpret and infer the nature and motivations of the character through these.