When I'm deep into a story - novella or novel - I go to a place in my dreams that I call "Storyland."
It's a town like Monterey, California with homes that crawl up from the bay to the hills. There's no set time period in this town. Sometimes when I visit, I'm in the 1840's when the U.S. Army Corps of Topographical Engineers, led by John C. Fremont, came into Alta California, liked what they saw and decided to take it from Mexico. Other times when I visit, it is present day.
I meet my characters in coffee shops, their homes or pass them on the street - once I saw Will and Tamara at a farmer's market but I think I was writing "Till Death Do Us Part" at the time. Sometimes they talk directly to me about what needs to happen in the story; other times I have to chase them down just to see what they eat for lunch.
Strange, yes, but when I realize I'm having a dream in Storyland, I feel like I've come home after a long voyage abroad. Even better, I feel like I've tapped into the vein of the story I'm writing. I realize not everyone has a Storyland, but then I was always a strange kid.
But here's what I'm wondering: where do you think your characters come from? When do you know they and your story have come to life?