This is a method by which you can create characters using a bit of role play. This may help people who are blocked with regards to what sort of character to make, or it might be employed to give characters deeper background, or a greater sense of existence. Or some may use the method just for the fun of it.
The method requires both the player making the character, and the help of the GM of the game.
The GM (or facilitator of the game or other willing player) and the player together decide on a typical starting place for action in the game world. The place should be somewhere the PCs would be known. We'll use the local tavern in a standard fantasy world for an example. The decision of where the scene is set often says a little something about who the character will be. If it's a tavern, the character likely is somebody who would frequent a tavern. If the game has a “Centralizing Concept,” then the setting should make sense with that centralizing concept.
Next the GM invents a character who is in the know about the local population - this is called the “Local” going forward. In our cliche example, a barkeep would be what you would probably expect for this. The player will play this character that the GM creates.
The player then invents somebody from out of town, or otherwise not in the know about the characters, somebody nosy, who likes to ask questions. This character is referred to as the “Nosy” below. In our classic example, the nosy might be a merchant looking for business opportunities. The GM will play this character that the player creates.
The player and GM can collaborate on these things, but in the end the GM has the final decision on who the Local is, and the player on who the Nosy is.
Creating these characters is hopefully low-pressure, since they are more or less throwaway characters. Though, that said, you may consider keeping them on as interesting NPCs once play starts.
The scene begins with the Local and the Nosy doing some sort of typical interaction that makes sense for the setting of the scene. In our example, typically our merchant Nosy would order something from our barkeep Local. The Nosy then asks the Local about somebody else at the setting, our potential PC, using non-specific language. Something like:
“Who is that over there?”
Note the lack of assumption of anything, really, even gender.
The player, responding at the Local creates an impression of their character. They can be as terse or loquacious as they like.
The Nosy continues to ask more questions, played by the GM as intrigued somehow by the potential PC. They ask more questions, which the GM can make leading to answer specific questions about character generation.
The Local comes up with responses, and continues to flesh out the potential PC in doing so.
When the character is fleshed out enough the players involved agree that the scene comes to an end, and narrate the end of the conversation. The player seeking a character then gets to decide if they want to play the character they've just created through play. If so, then this phase is complete. If they decide they do not want to play the character created, the Nosy begins again with another question about another potential PC in the setting.
If the PC is close, but not quite right, the player can accept the potential PC as their PC, and state that some of what the Local said about the PC was incorrect information (nobody is perfect), and come up with the actual facts about the PC.