What are your characters' favourite stories and books?  What in your fictional world is its literary culture?  What are the legends everyone in your story would know?  What would be considered the sacred texts?

Are stories available only in print or is the oral storytelling tradition very much in evidence?  Is there a storyteller/scribe role within the world you've set up?  Do the stories within your story affect how your character acts and reacts?  Do they want to be or to ape the legends their world honours?

In my fictional Fairy Kingdom the villages and towns put on re-enactments of the classic fairytales to keep them alive.  What would your world do here?  What can you tell about your characters from the stories they love and can they be persuaded by other characters to try other tales and genres?

What is it about the legends in your setting that have them become/be treated as legends?  There are stories to be written about the story behind the story!  And certainly someone's taste in literature can reveal a great deal about them so that alone would be helpful for character portrayal.

It doesn't matter what world you live on/in.  It doesn't matter if you are considered to be the lowest of the low but everyone has to carry out mundane daily tasks.  Some these are on the fairy/magical world include:-

1. Clearing up any ingredients not used for spells and so on.
   
2. Polishing up magic mirrors (a talking magical mirror that is happier about how it is looking is more likely to be helpful when processing your wishes).
   
3. Arranging spell books in the proper order.  Each magical being has their own version of what "proper order" means so best check with the boss before you get started.
   
4. Sweeping up, mopping up and so on.  Definitely no magic allowed for this one.
   
5. Topping up store cupboards with off the shelf ingredients.  Someone has to get eye of newt ready for the boss to use after all.
   

Your average fairytale contains all of the above three elements!  Beauty and the Beast has Beauty as the good, the bad would be the witch who cursed the prince and of course Beast would count as the ugly element.  Though what I do love about this tale is the very strong message that (a) beauty really is in the eye of the beholder and (b) what you look like should not be the be all and end all in any case.  Still a very pertinent message.

So what would count as the good, the bad and the ugly in your stories?  Yes, they can be direct representations.  Beauty and the Beast isn't subtle.  Even its title isn't!  But how about showing the good, the bad and the ugly in terms of attitudes your characters have.  The physically beautiful one is actually the ugly one because their attitudes are so horrid and that kind of thing.  What could you subvert here?  (Fairytales are great for that.  I think it is why Shrek worked so well).  And yes you could still have the ugly one being ugly, not because they happen to look that way, but again their attitude is decidedly "off". 

Hogwarts (J.K.Rowling) and Unseen University (Terry Pratchett) are, for me at least, the best known places of magical education.  But education should play a part in your stories even if they are not directly about that.

Why?  Well can your characters read and write?  The answer to that is not necessarily.  Your society could have levels of illiteracy.  You could be looking at why that is and whether anyone is trying to change it.  Equally your hero/heroine may come from an educational background not usually known for heroics, so making their story more remarkable, but there has to be some feel for what is considered a normal education in your societies so your readers can pick up on that point.

How does the education your characters have had help them (or otherwise) with the lives they are living now?  Are they making up for lost time by increasing their education now?  What got in their way that stopped from doing this at the "normal" age?

Interesting points to ponder I think - and there could be some cracking stories in these thoughts.