Linonhead Studios has made a new web application for Fable III called “Create your own villager” that allows the gamers to make their own NPC’s. Anyone can play with this application, but for those who pre-order the game from certain retailers will be given an activation code that allows them to import one character into their own copy of the game.
Through character creation one must determine the character’s name, gender, etc. and answering questions to determine its personality and alignment. Then the villager will appear in Fable III and start a quest appropriate to its past alignment or personality. After completing the quest, the player can interact with the NPC or even romance it.
You can check the tutorial here.