Libbie Hawker uses character to describe how she builds her plots. Every story begins with a character, and that character must have a flaw. Hawker calls it a "pivotal" flaw to emphasize its importance. This flaw should exist deep in the core of the character. Consciously or subconsciously (probably subconsciously), this flaw should drive the character's actions.
The arc of the story is constructed around this flaw. The events of the story should serve to slowly reveal this flaw to the character, bring it to the character's conscious attention, culminating in the dark moment, when the character stares the flaw in the face, then decides to face it down in the final showdown. The external goal that drives the Protagonist through the story should be specifically chosen to require the character to face their pivotal flaw. That is (to use a trivial example), if the Protagonist is afraid of heights, the external goal should require them to scale a sheer cliff or climb a tall building to achieve it.
In this way, Hawker uses character to drive her plot construction. She also uses Antagonists and Allies to add dimension to the Protagonist by showing character alternatives (Antagonist) or prodding the Protagonist in the right moment to understand and face their pivotal flaw (Allies).
However, I think this approach to plot construction can go much, much deeper.
Let's think about character as superimposed on the three-act structure.
In Act One, we see the character in their Ordinary World. We all, in our everyday lives, have come up with ways to compensate for our weaknesses, often by leveraging our unique strengths. If someone is afraid of heights, but they're really good at music, maybe they've found a way to collaborate from their ranch-style one-story home to avoid ever having to visit the high-rise music label offices in LA. (Okay, bad example, but you get the idea.) This creates stasis or balance in their ordinary life. We all crave balance. This balance may leave the character content or yearning for more, but it is balance, nonetheless. Sure, there are weaknesses, but the character doesn't have to deal with them on a day-to-day basis because they've implemented all of these coping mechanisms.
It is this balance that will be threatened in Act One, in the Catalyst moment. From that moment forward, the character will try one thing after another to restore balance (the External Goal), starting first with easy solutions (all of which will fail, causing the decision to step into Act Two), then getting progressively harder until the character is forced to face their pivotal flaw (the Internal Goal) in the Dark Moment at the end of Act Two.
Thus, in pursuing the external goal, the protagonist works through layer after layer of emotional defenses until they're left in the Dark Moment with their final choice: is this external goal important enough to force you to face your greatest weakness, which is often closely tied to your greatest fear?
By the Dark Moment, we should have learned the backstory that caused the fear and/or weakness, so that we understand the need to overcome it, and the difficulty in doing so. At this time, the external goal could still be abandoned by a protagonist desperate to avoid facing their fear ("Meh. I can just go dig ditches for a living. Music is boring, anyway."), but a new association, often a love interest, will have arisen that adds more stakes and impels the protagonist forward. ("I could dig ditches, but then I'll never get to see Harry from Sony Music again, and his office is on the 87th floor.")
The character's strength often plays a key role in the Act Three solution, with the real power coming from the combination of that "external" strength and the newfound "internal" strength gained from mustering the courage and motivation to face their inner fear. At some basic level, I think all stories are about facing our fears. The Ordinary World was a jerry-rigged compensation. Through the process of Act Two, that fact becomes clear to the character. The process of Act Three strips away the jerry-rigging and attempts to construct a stronger, more authentic world. It can succeed or fail (though it usually succeeds), but, either way, the world to which the character returns is significantly different from the Ordinary World. It's a New World, built upon this one, fundamental change in the emotional core of the character.