I was browsing though youtube today, and I found this video about basic character types in a story.
Most of the video, about Mary Sues and the Everyman is fairly standard stuff you can find all over the internet; I want to focus on what he said towards the end of the video.
"Characters don't exist like in a vacuum. You don't like design a character, like here's the character! And that's something that a lot of amateurs do, is they like write down all their character traits or something like that. No, characters only exhibit themselves through a story, through a plot, through the execution of events that's going on in your story. Because they only exhibit themselves through that, those events have to have an impact on them and they have to have an impact on the events, so it's a mistake to design a character outside of the plot. You have to think about how a character is going to grow through a plot; the plot is going to affect the character intimately."
I see this as more relevant to the creation of a character for D&D than for a novel; yes, it still applies to writing novels and such, but it rings still truer for RPGs in general. He describes exactly what everyone is doing with their RPG characters (whether PC or NPC), writing down a list of traits and calling that a character. This is what character backgrounds are at their core; they "design a character outside of the plot."
I recently started playing in a group where we are using the Cypher system, and character creation that should have taken 20 minutes, based on the pure mechanics, took over an hour because we needed to have an idea of our character before making it. I have trouble creating a new character concept before play because I just don't have any new ideas that are significantly different than any of the 30+ D&D characters and at least a dozen characters from other game systems. Sure I can make a character mechanically different, but to come up with a character with a different personality and motivations? That's difficult! Especially trying to do it before even starting to play in a setting/campaign/with a new group; also most of my previous characters were developed organically through play, and not all at once before starting a game. When creating new characters, I tend to come up with something and then analyze the character I just made, and think that this character is essentially the same as another character I already have, so why not just transfer my old character to the new campaign? Except that any DM I have met that started DMing after the year 2000 (3.0D&D) doesn't allow character transfers.
Back on topic. Characters in any RPG are not created at character creation, or as I prefer to call it: character generation, but that's another topic. The PC is not a character before play starts, you could even say they aren't a character until the end of the 1st session. At character creation they are just numbers on paper, a list of traits. There is nothing that grounds those numbers in the players mind and imagination. It's all abstract ideas. When the PC is played by a person, they make decisions for that character as if they are that character, when there is some interaction between the character and the audience(in this case the players), that character becomes real. The character is revealed though play. It doesn't matter if the player wrote a 26 page long backstory; there is no character. It's not until the character acts in the context of the game that the character emerges, and more than likely the character being played is drastically different than the one in the 26 page backstory. It is through the events of the game, interacting with obstacles presented by the DM that we learn who the character is.
I could probably go on, but I think I'd only belabor the point.