The depiction of the other characters and the environment all depend on what the narrator knows, or think they know but we’ll come to that. What they know depends largely on what they see and what they’ve been told by other characters. While I’ve discussed the idea that what every character tells them depends on their motives and what the characters want the narrator to think let’s keep it straightforward in this article and pretend we’re dealing with facts when other characters speak. Interpretation will come in the next article,
Now, we may consider what a character ‘knows’ as what they witness happen, what they hear has happened and what they read. All these things come together to affect the depiction of a character or a place. The adage goes that ‘actions speak louder than words’ and characters may often take people’s actions over their words, like real people. If the narrator sees a character do something they consider positive they’re more likely to depict them in a positive light than if they hear they have but never see them do something positive.
Perhaps if I refer to Victorian Mistress again, as it is easily accessed on this site, Charlotte as the narrator doesn’t understand Bran and Josef’s friendship because she can’t see their friendship without her being present. As soon as Charlotte is present the dynamic of their relationship changes to accommodate her based on their relationships with her. They can tell her one thing, which can be entirely true, but if what she sees is different than it will dominate her depiction of their relationship. In short she knows what she sees.
On the other hand if a narrator has been told something before they meet a character than that will become part of what they know, and affect the way they depict a character when they meet them. If they don’t know anything about the character before they meet them then once again this will affect their depiction because they won’t have any preconceived notions and what they know will become what they see when they first meet. A lack of knowledge might either make them more receptive to a character or less so depending upon the narrator’s personality.
What they know can change because of what they learn, which isn’t entirely a matter of perception. Their perception might be how they interpret things based on their knowledge of the world or the people. For instance in The Matrix to begin with Neo/Anderson knows he’s in the real world so he treats it as the real world. Except his knowledge is wrong, not his interpretation, he has been told he’s in the real world but he’s actually in a computer simulation. The way he interacts with the environment changes based on new information that furthers his knowledge of the world/worlds rather than him simply changing his opinion of the world.
Of course, the problem with characters, as with real people, is that they interpret facts. Their interpretation of those ‘facts’ is all in important.