The Cut of your Jib
Given how open-ended Fable purports to be, you're not really given any input as to what your character is like at the game's outset. You're always the same boy with the same look and the same background. All the vital distinctions in these areas come about dynamically throughout the course of the game. The one element that isn't compensated for by the real-time progression is gender: you simply can't play a female hero. It's strange, because there's no real narrative reason why the hero couldn't be female; he barely talks during the game, and all the passing references made to his gender by non-player characters could have easily been changed.
That said, the level to which your character develops as you play, and the ways in which this is visually represented, are immensely impressive. On the superficial front, depending on how you choose to tailor your character's attributes, he'll look completely different. Focus on hand-to-hand combat and increase all the relevant attributes, and your hero will turn out burly and menacing. If you choose to make your character more of a magic user, his look will reflect it: all the supernatural energy coursing through him will cause him to age at an accelerated rate.

Crime doesn't pay. Unless you consider looking totally rad sufficient payment.
The ethical decisions you make throughout the game also have a huge bearing on not only your look, but also how your hero is perceived by the populace. This is reflected by your "Alignment" rating. Basically, if you become the devil incarnate, you'll look the part: you'll sprout horns, your eyes will adopt a fiendish glow, and your skin will become pasty and foul. The common folk, naturally, will react to you with fear and suspicion. But if you perform good works throughout the world, your visage will reflect your angelic nature. You'll have a faint little halo over your head, and spectral butterflies will envelope your aura. Basically you'll look like some kind of radioactive Gap model, and the people will sing your blessings as you pass.
The system allows for some interesting stuff, but some of the ways in which it has been implemented seem a little bit silly. For instance, eating a block of tofu will shift your alignment slightly towards good. But doing the opposite -- which I'm assuming would be eating hunks of animal meat -- doesn't garner any evil points. Same with clothing; some outfits will affect your alignment rating while you have them on, but once you remove them, you're back to your old self. Considering that there are also both "Scariness" and "Attractiveness" ratings built into the outfits, this seems extra superfluous.