World building and populating that world.

World-building is extremely important in three categories of fiction:

science fiction
fantasy
historical fiction

It can also be important in other categories, but world-building is most strongly associated with the above.

Going Deep or Going Wide
World-building is a large topic with many aspects. We’ll focus on people groups, but keep in mind that it’s not the only aspect.

Generally, novelists choose to go either deep or wide in constructing people groups.

“Going deep” means focusing on one single people group that’s different from the one the target audience belongs to. (For example: Amish fiction, targeted to non-Amish readers. Alternatively, World War II fiction set in Nazi Germany, targeted to American readers.)

“Going wide” means having many different people groups that interact with each other. (For example, The Lord of the Rings has humans, hobbits, elves, dwarves, orcs, trolls, wizards, balrogs, ents, and more. The humans have several different people groups—the villages around Bree, the Rohirrim, and the men of Minas Tirith. The elves are likewise split geographically into people groups that live in Mirkwood, Lothlorien, and Rivendell.)

So how do you construct a people group? You have a lot of options, but they boil down to asking two very important questions:

What do all members of this people group have in common?
How does this people group split up along party lines?

Going Deep
As an example, in the Harry Potter series, the main people group is composed of the witches and wizards. There is a second people group composed of muggles—non-magical people. But the Potter series goes deep—the witches and wizards get the great majority of the air-time in the series.

What do the witches and wizards have in common? They all have the genetic ability to do magic.
How are they split along party lines? They differ in their attitudes towards muggles. Lord Voldemort’s party believes that muggles should be ill-treated. They can be killed, tortured, or harassed at will. Witches and wizards who have muggle ancestors are considered “mud-bloods” and should be repressed. Albus Dumbledore’s party believes that muggles should be treated with decency and respect.
Notice a key point. The storyline of the Harry Potter series is driven by the party differences among the witches and wizards, not by their commonality. Yes, it’s interesting to see how magic plays a role in their ordinary lives, and this provides a lot of local color to the story. But the great arc of the storyline is driven by Lord Voldemort’s attempt to take over the magical world, and Albus Dumbledore’s efforts to defeat him.

The Potter series goes deep, and the story is driven by internal factions within one people group.

That’s not the only option, however. You can go deep but have the story be driven by the battle of your main people group with some other people group. As an example, the movie Independence Day told the story of an invasion of planet earth by aliens who are mostly not seen.

Another option is to go deep and have the main conflict be driven by differences between individuals in the main people group. As an example, an Amish romance novel would feature a single people group and could have no factions at all but could simply focus on the classic romance storyline—will the hero and the heroine get together? In this case, your main work in constructing your people group is understanding the things that your people have in common, especially those things that are different from the ordinary world of the target readers.

Going Wide
When you have multiple people groups that play a central role in your story, you now have a third question:

What are the central conflicts between your people groups?
In The Lord of the Rings, we have many of these:

The orcs hate pretty much all the other people groups, and are slaves of Lord Sauron, who is not an orc but created them for his own purposes.
Elves hate the orcs and will never cooperate with them, but they might choose to insulate themselves from the orcs, giving them free rein. The elves have the right to leave Middle Earth if they choose. Elves are impervious to disease and aging, but they can be killed. So doing battle with orcs has an enormous cost—the elves risk dying in battle.
Dwarves also hate orcs, but they don’t like elves either, and it’s very difficult to get the elves and dwarves to cooperate to defeat their common enemy. Dwarves have fewer options when it comes to insulating themselves from the orcs. They can’t flee Middle Earth, as the elves can. Dwarves have a love for gold that makes it possible, in principle, to buy their allegiance to the dark side. But they much prefer to keep to themselves.
Humans mostly hate orcs, but some of them have gone over to the dark side and collaborate with them. Humans look with suspicion on the elves and dwarves and believe that they have to rely on themselves to get anything done. The humans are ready to fight, but they live shorter lives than the other people groups, and they sometimes feel like they are doing most of the work in battling evil, while getting little reward for their trouble.
Hobbits are barely aware of the wider world. They know that the elves and dwarves and humans and orcs exist, but they don’t think that the wars of these outsiders make a difference to them. Hobbits are happy to keep to themselves and live their own lives.
Ents are a frozen race. They’re essentially immortal, but they’ve lost the ent-wives, so they aren’t reproducing. They’ve secluded themselves even more than the hobbits in their own little enclave. They’re also very slow to make decisions. But once they choose to fight, they are extraordinarily powerful.
Wizards are sent into Middle Earth in the guise of men. It’s not clear what wizards are, but their role is to guide the free peoples of Middle Earth to maintain their freedom, but without subjugating them. Wizards can go over to the dark side, and one of them does.
So The Lord of the Rings has one central conflict—Lord Sauron and his orc minions are trying to subjugate the elves, humans, dwarves, and hobbits. The wizards, led by Gandalf, are trying to resist Lord Sauron and ultimately defeat him.

Sauron’s strategy is to divide and conquer. He’s helped by the natural animosities between the elves, dwarves, and humans, and he does his best to boost these animosities.

Gandalf’s strategy is to unify and resist. He must get the elves, dwarves, men, hobbits, and ents to set aside their differences and fight Sauron. No easy task, but if it were easy, there wouldn’t be much of a story.

When Sauron and Gandalf learn that the One Ring of Power still exists, the race is on to find it and use it to tip the balance of power. But the Ring is so corrosive that it can only be trusted in the hands of the hobbits, who are least susceptible to its power.

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