Making characters multidimensional and unique. What can I do?

Disadvantages.

Coping with them.

That's it. How did they struggle through highschool with having a big nose? How do they date when ugly? How do they work if stupid? Disadvantages!

Some of the other answers have done a great job at addressing the topic of good characters in general, so this focuses specifically on the dialogue:

In my opinion, great dialogue is all about subtext. When people talk to each other, what's going on in the words is rarely the whole conversation. Mood, hidden goals and desires, mutual history, personality, sexual tension, competition, aggression and so forth are all part of the subtext. Even a conversation about the weather can hold a wealth of information about the characters --are they real friends, fake friends, secret enemies, bored with each other, flirting?

A good exercise can be to write the subtext out explicitly and then write the dialogue second.

Example:

• Subtext: I'm depressed ::Text: "So glad it's finally spring, I think I would have killed myself if we had one more grey winter day."
• Subtext: I need to make some smalltalk so I don't have to talk about anything real:: Text: "Hey, how about this sun, right?"
• ST: I hate this guy:: T: "Hot enough for you? You must be burning up in that heavy suit."
• ST: I wish I was somewhere else::T: "Sunny and sixty. But it looks like rain..."
• ST: She's beautiful:: "Wow, it's really warm today. I bet the flowers will be blooming any minute now."

In the examples above, you might make very different choices to express the chosen subtext --that's not the point. The point is that you write the dialogue differently based on what the characters are thinking and feeling, even if the topic is the same.

I feel that I may be simply adding a footnote but here is what I do when the cast on the page grows really quickly.

I have a "bible" of background information which I tend to print off and carry about with me for when I have ideas. I add a list of characters to this. Now because I am adding a lot very quickly I cheat and use a short hand.

I try to add one of each of the following.

Character Flaw: Some vice, addiction or mental block that they can't see past. Sometimes this is just an excessive sensitivity based on a past trauma. My favourite character ever was once a walk on part that was utterly messed up from bullying when at school. He was so much fun to write that he got entire stories to himself and I do my best to throw him into the background of every story I write.

A Quirk: For really cheap characterization this can be a beard, a pipe they smoke, the over use of a word or phrase or just something equally mundane (like left handed or picks nose). It sounds cheesy but I have a list of quirks that I maintain and I try and pull one or two out for each character I create. It's not the daftness ofthe idea so much as how well you bring it to life that matters.

Morality indicators: Sometimes I simply use the DnD lawful to chaotic, evil to good scale but to be honest you should get a lot more exact than that. Supports slavery, is anti-gay, is gay, vegetarian, racist, is an anarchist at heart; etc. etc..

Loves and hates: I try to pick a bunch of random stuff (sometime literally random but sometimes better thought out).

A secret: This could be something like they are closet gay or they secretly vote right-wing but have lefty friends, they once got away with murder, they have a drug habit (see above lists). Maybe they are cheating on their wife or as someone else suggested they are a jock but they attend a night class in ballet. Are they in debt but too proud to tell anyone, for example (which leads nicely to the big question in a moment).

You can also add other stuff like if their mother and father are still alive and if they have siblings. Are they rich or poor? What job do they have? How do they dress?

There comes a point that for more minor characters there is far more information than you are ever going to show the reader and it is not going to make them any more unique to your mind.

If that still does not seem enough assign them a famous actor. This will give you an idea of voice and bearing that you are familiar with and some of that will come across in your writing. This also works by using people you know as the "actor".

Then we get to the big question that really brings all the fluff to life:

What Do They Want?

This is the thing that drives the character forward. In fact if the character is only going to hang about for a chapter or two this question alone makes them unique. What are they doing on your stage and why?

This is where those secrets, morality indicators and odd vices help you come up with consequences and motivators that fit. What crazy, foolish or funny situation is the character in and trying to get out of (or away from)? What are they trying to get? Also is it realistic or are they fooling themselves?

Are they just trying to get the shopping done before the wife gets home or are they trying to save their little sister from a drug habit?

TL;DR: Show me what each character wants by what they say and do and they will very rapidly become unique characters to me as a reader.

I believe there is no "recipe" with which to cook up three-dimensional characters. However, since "good" characters - realistic, believable, full of faults, contradictions, anxieties and passions - are what I value above all in a story and what I put most effort in, here is how I develop my characters:

• Start with an idea. What kind of story do you want to tell? What is the message that you want to get across (if there is one at all)? Why is it important to you?
• Which traits does a character have to possess to add tension to the story? Suppose you want to tell a story about a lumber-jack that hunts an evil spirit wolf. What would the lumber-jack need to be like to make a good story out of this idea? Would he be infinitely more clever than the spirit wolf? Would he need to have special abilities to actually carry out the hunt? What are his personal motivations to hunt the wolf? Make a very rough draft of the character that fits your idea. Then, and this is the very heart of my character development:
• Write a short biography. In my experience, it takes time to get accustomed to a character and develop the right amount of intuition about him or her. I gain this inutition by writing about him outside of the actual story. I do not structure the biography at all, I simply start off with the sentence "So-and-so was born on this-and-that day to a family of three. His mother was ..." and so on. These stories are not meant to do anything useful in your project. They simply help you to get a grasp on your character. In the case of the lumberjack above, he could be an orphan that was raised in a big city by step parents and yearns to establish some connection to his lost parents. And so on.
• I know that I am done with preparing my character when I do not have to think about his reactions any more. Pick an arbitrary question or choice and answer it on behalf of your character. Imagine a random scene. How would your character behave? If you are able to answer these questions without hesitating, your character is ready to be deployed in your project.

Note that this strategy has a very substantial disadvantages: It makes your characters unbelievably stubborn. I had to abort the work on entire novels because my characters simply refused to play along in the storyline that I had in mind. However, this usually is not that big a problem since I write very character-oriented anyways, i.e.: I tell the stories that my characters "tell me" and stopped pre-developping plots some time ago.

Personally, I also encounter difficulties if I find my characters to be annoying or boring. This, of course, is purely subjective and the only thing you can do about it is to give your characters some traits that you enjoy in others or yourself. For example, I am very impatient with passive characters.

Lastly, I find it very useful to observe the people that I meet on a day-to-day basis. This is not about categorizing and stereotyping. It's about developing your sense about other people and exercise your empathy. Because this is what is at the heart of good novels: Empathy.

Give the characters something unique: It doesn't have to be something mind-blowing or some kind of superpower. It could be something as simple as a toe fetish or not being able to remember dates.

Give them an unexpected behavior: The wife of one of them left him and he reacted by ... cleaning the house from morning to night?! What?

Give them an inexplicable behavior: Maybe they like to collect canned cocktails or go to the beach during hurricanes.

Give them complex back stories: Humans are complex beings. If you want your characters to be more human, enliven them with rich back stories.

Don't make them cliched: The mad scientist, the jock, the drunk wife beater, you know them. However, you can also grab a cliched character and turn it into a non-cliched character (e.g. Tom is a jock ... who secretly attends ballet classes at night).

Don't make them black and white: I'm not talking about race but to avoid making your characters either completely good or completely bad. These characters are boring, because they are easy to predict.

That being said, I think your characters should be a reflection of your plot. If your plot is interesting, your characters will be interesting (it also works the other way around).