Not being a mind reader, I can't say what K2 means by "character demeanor", but I see four basic contexts in which the use of words and/or vocabulary might be different (which isn't to say that, depending on the circumstances, there isn't variation
within these contexts):
- Dialogue (which ought to be self-explanatory)
- The PoV character's thoughts (which also ought to be self-explanatory)
- Free indirect speech
- Narrative (which again ought to be self-explanatory)
Personally, I like to think of free indirect speech -- a term I first encountered when reading
Conscousness and the Novel by the author and literary critic David Lodge -- as a bit like the PoV character's thoughts not written, as they usually are, as a sort of dialogue (i.e. in first person and in the present tense, whatever the person and tense of the narrative), but in the person and tense of the narrative. To me, it seems to give a different effect from -- a different emphasis than -- the direct quoting of thoughts, so that one can use both quoted thoughts and thoughts encapsulated by free indirect speech in the same paragraph.
Here's some of what David Lodge has to say about it:
"Is that the clock striking twelve?" Cinderella exclaimed. "Dear me, I shall be late." This is a combination of direct or quoted speech and a narrator's description.
Cinderella enquired if the clock was striking twelve and expressed a fear that she would be late is reported or indirect speech, in which the same information is conveyed but the individuality of the character's voice is supressed by the narrator's.
Was that the clock striking twelve? She would be late is free indirect speech. Cinderella's concern is now a silent, private thought expressed in her own words, to which we are given access without the overt mediation of a narrator. Grammatically it requires a narrator's tag, such as "she asked herself," "she told herself," but we take this as understood. hence it is termed "free." The effect is to locate the narrative in Cinderella's consciousness.
I've also written about it
here.