Character Development can be a huge sticking point for many screenwriters out there. We often get hung up on tiny little details that prevent us from making progress on the actual script but truly understanding our characters helps us to understand how they will act or react to their given challenges in the worlds we have invented for them. First we must remember that our characters exist in three separate worlds and our protagonist(s) will eventually exist in all three. These are all part of your character and story arcs.
First we have the "ordinary" world: sometimes referred to as the "known" world, this is the world in which the protagonist(s) exist. It is known to them and provides a status quo in there lives.
There is also the "magical" world: also know as the unknown world, this is the world that the protagonist(s) is drawn into to begin their adventure and is full of challenges, danger and trials.
The last world is a modified "ordinary" world known as "the world changed": this is the return of the protagonist to the previous world that they left but he/she is changed via facing the challenges of the "magical" world and is able to apply new knowledge or skill to the "ordinary" world that changes the status quo.
To understand the personality and vulnerabilities of your character is key to understanding how this character will operate under duress and/or pressure or how they will act and react to benign situations or in times of levity.
Many writers believe that they need to know their characters inside and out and often spend too much time trying to "inhabit" the mind of their creations. The trouble with this is that writers often loose sight of the overall story and allow too many details about their character to stunt their growth in developing the story. There are two schools of thoughts regarding character development. The first being that you must know your character inside and out to provide depth, the other is to only know general details about your character such as age, gender and race. Neither practice is wrong but both have their pitfalls.
My playwriting instructor had some great guidance and advice on this. First know your character's age, gender and race but also know details about that character's physical appearance like hair color, eye color, are they a teenager or a single middle aged mom, are they rich or middle class? These more detailed attributes are usually informed by the story itself and will unfold throughout the script but knowing these things about your character will start to help you understand how they will interact with the world you've created.
My instructor also suggested looking through magazines and cutting out pictures of people that resemble your characters and save them in a place where you can reflect on the physicality of your characters to help you envision your story. It solidifies the connections and helps you place your thoughts onto paper.
For instance what if your character is a truck stop diner waitress who lives in a small town. Just this statement says a lot about the economic situation, possible hardships and perhaps even the current state of mind of the character. Is this waitress middle aged or is she young? What if I said her name was Elvira? What comes to your mind when you read that name, knowing the other details about her? How do you picture her? Does she have over processed red hair with dark roots showing? Is she wearing big pink, plastic, ball earrings? Can you see her with bright orange lipstick and heavy eye shadow? I can. If I see that in my mind I can certainly find images in magazines or online that fit those characteristics.
The best advice I ever got was to just start writing. Almost no one has had a perfectly drafted script the first time around. The first draft is the flush out your story, the second draft is to flush out your characters, the third draft is where you begin to hone and polish both story and character (also great advice). Don't focus on having to know your characters down to every last detail before you even get to your story. The screenplay often helps your character development during the process. It is also wise to allow room for an actor to bring their talent to the character and will often add dimensions you hadn't foreseen but totally work.
Now get to work and much success to you. Happy Creating!