Characters are the story. Without them, you would have no story. Audiences connect with characters, who are the players on stage, the talking insects in animated films, and the adventurers on the pages of novels. Characters interact with the world and make the decisions that propel the story forward. How the story is told, however, or rather, by whom, can radically change the experience for the audience.
While many pieces of theater or film don't contain any narration at all, narratives in prose and those passed by word of mouth are all told from a more-or-less defined source. (Some experimental forms of fiction push the boundaries of this idea.) And while the conventional modes of first-person, second-person and third-person perspectives of narration are still touchstones for understanding, point of view can more easily be seen as a spectrum of sources from which any given story can be told. The character who tells the story will color the events as the conflict develops.
Characters want things. Most characters want one thing, really badly. In stories, two or more characters want things that draw them into opposition with one another. They may be opponents on a battlefield, politicians running for the same office, or children competing for the attention of their parents.The conflict is the problem the main character has to overcome to get what he or she wants, and how that character, and others, reacts to the problem and all of the resulting decisions shapes the action and events of the story, which are called the plot.
A story requires a place and time in which the characters can interact, develop relationships, encounter obstacles, experience realizations, and learn. The setting of a story can greatly influence the characters; it can even serve as a character itself: a city adopts the role of an inescapable prison, a forest becomes a place of magic. A story set in the Old West will often dictate whether the outlaws speed away on horseback or in sports cars. If two bank robbers are running through the wilderness and find themselves with only a rickety footbridge to cross a ravine, the setting will have just influenced how the characters will behave. Such a development also heightens the tension.
Theme is the moral of the story. It's the message, or the lesson, and these lessons are experienced by the characters. Themes are usually revealed explicitly as realizations experienced by the main character at the end of the narrative, providing that character with the insight he or she needs to grow as an individual. However, they can also be felt throughout the tale in other, less profound realizations. In fact, several themes can exist in one narrative.