Microsoft is boasting that there are more that 2,000 combinations players can take advantage of - including back story, personality traits, gender, clothing, accent, hair and geographic origin (where in the world of Albion your character came from). The interaction that you will have with the character is completely up to you. You can make them good, turn them evil, befriend them, marry them - whatever you want. Microsoft wants Fable 3 to fully be your game to control.

Check out this video from Comic-Con demonstrating the Villager Maker:

Now even if you don't pre-order, you won't be left out of the fun; anyone can use the Villager Maker, but only those that pre-order can actually import them into the game. This is done using a redeemable code that players will receive upon pre-order, so when you pre-order make sure you get that code!