Tabula Rasa
This method creates characters by constructing a backstory for them. Starting as a callow youth with no skills, no quirks, and no unusual attributes (that is, an empty slate, or tabula rasa 1), the player chooses a profession from a list. This adds some skills and perhaps changes a few attributes. The player is then presented with a second list that omits many of the original choices but offers new ones instead (depending on what the character decided). The process iterates, with new opportunities and specializations presenting themselves. When it stops, not only can a character be created, but a short history, too.
For example:
“Zayre spent much of her formative years helping her carpenter father. The call to adventure was too strong, however, and so she joined a merchant train as a traveling cooper. Soon, she turned her talents to fletching, and became adept with the bow. Her reputation grew as she defended the caravan from bandits and raiders, until eventually she left to join the army as an archery instructor. Finding the discipline too stifling, she volunteered to become a scout, patrolling the barbarian wilderness with only her horse, her bow, and her thoughts for company.”
I first encountered this idea in the single-player role-playing game Darklands 2, where it was very effective. It doesn’t seem to have made much of an inroad into virtual worlds, though, perhaps because it implies that characters age. This is a shame, as it remains my personal favorite.