You will generate three distinct sets of ability scores to draw from. Each player will roll 3d6 six times to generate each set, and will be able to choose one of the three sets to use in play. You will be able to reorder the chosen set in whichever order you wish.
Example: Cowleyc has rolled a set containing 7, 13, 13, 8, 16, 12, as well as two other sets that aren't as impressive. First, he decides to take the first set. He chooses to create Eltrezar, a Wizard of some sort, so he rearranges the scores in the order of Str: 7, Dex: 8, Con: 13, Int: 16, Wis: 13, Cha: 12.
Step 2: Determine Race
You will be able to select from the standard races of Human, Halfling, Gnome, Dwarf, Elf, or Half-Elf. If there is another race you are interested in (Half-Orc, Half-Ogre, etc), feel free to ask, and I will make a determination. Your race will provide allowed classes, racial ability score minimums and maximums, as well as a slew of abilities and modifiers.
Example: Cowleyc has decided that he wants to make Eltrezar a Human, because he appreciates the long-bearded wizard trope. He sees that Humans can be wizards, and have minimums of 3 in all scores as well as maximums of 18 in all scores. That makes this easy!
Step 3: Select Class
You will be able to select any of the classes that you qualify for due to race and ability score! Before anyone asks, we will not be using psionics in this game (though the enemies don't share the same restriction, such as Mind Flayers should you be so unlucky). Each group of classes (Warrior, Rogue, Priest, and Wizard) have several subclasses that you will choose from. The groups will determine your hit dice and saving throws, while the individual class will determine your XP progression, proficiency chart, and class abilities.
Example: Eltrezar is a wizard of some sort, but it doesn't look like he qualifies for any of the Specializations, due to his otherwise lackluster ability scores! This means that the old man will be a Mage, an unspecialized Wizard. He will start with d4 Hit Points and need 2500 XP to reach level 2, a seemingly impossible task!
Optional - Step 3a: Select Kit
Players will be allowed to select kits from either the Complete [Blank] Handbooks or from the Players Option books. These kits will have prerequisites such as race or ability score as well as a class, provide bonus Nonweapon Proficiencies, offer bonus abilities, and usually have some sort of drawback. These are not required, and certain kits may be shot down by the DM (looking at you, Greenwood Ranger).
Example: Cowleyc decides that his character Eltrezar is the perfect definition of an Academician, and so he ensures that his character has the required Int: 13 and Wis: 11, and sees that there are no other requirements. He gains the Reading/Writing Nonweapon Proficiency (which he applies to Common), and adds the other abilities to his character sheet. The downside is that he is expected to roleplay Eltrezar as an insufferable windbag... which isn't a problem, as he was planning on doing that anyways!
Step 4: Determine Proficiencies
You will be selecting from a number of Weapon and Nonweapon Proficiencies. Each class group will tell you how many proficiencies you start with for each category, as well as how often you will select new ones as you level up. Warriors start with four Weapon Proficiencies and three Nonweapon Proficiencies, Wizards with one and four respectively, Rogues with two and three, and Priests with two and four.
Weapon Proficiencies
Each character will select a number of individual weapon proficiencies equal to the number allowed in the chart. Single-class fighter (of the warrior group) will also be able to select a weapon specialization by spending a second point on a specific weapon. This will give the fighter bonuses to attack, damage, and extra attacks per round! Each class group also has a penalty associated for attacking with a non-proficient weapon. It's small for Warriors, and Wizards might not even bother trying.
Nonweapon Proficiencies
Each class will have allowed groups of proficiencies to select from (though most will only have access to the General and Class groups). Players can select proficiencies from outside their groups for an extra proficiency point. High intelligence scores will provide bonus points (see: Bonus Languages) to use when selecting proficiencies. Each Nonweapon Proficiency will also have an associated ability score and modifier, which will help calculate the difficulty when making checks.
Example: As a Mage, Eltrezar starts with only a single Weapon Proficiency. Not wanting to be in melee, but also not wanting to be defenseless should that occur, he selects the humble dagger. This should give him a melee and ranged option. At the same time, he is allowed to select four Nonweapon Proficiencies from the General and Wizard groups. He chooses Ancient Languages (for one proficiency point), Astrology (for two proficiency points), and Spellcraft (for one proficiency point). His Intelligence score of 16 also gives him five bonus proficiency points, which he spends on Read/Write: Common, and the ability to speak Elven, Dwarven, Draconic, and Ogrish (for one proficiency point each).
Step 4: Purchase Equipment
Characters will start with a free backpack, set of traveling clothes, and knife. Outside of that, they will determine starting gold by rolling from the chart in the Players Handbook (or modified by a kit) and purchase any equipment they wish! Don't forget to take into account your characters Encumbrance, which is determined by her Strength!
Example: Eltrezar, as a wizard, starts with (1d4+1)*10 gold pieces. He rolls a 2, which puts him at 30gp. He quickly buys a few daggers, a wineskin, and a bedroll. It can get chilly at night! The rest he saves to spend during his adventures.
Step 4: Select Spells
Some characters will start with spells that they will select (such as Wizards and their spellbooks). Priests do not have to select spells, though Specialty Priests will have to select Spell Spheres (groupings of spells that match the ethos of their deity). Wizards will start with Detect Magic, Read Magic, and four other spells of their choice. If you wish to play in Hardcore Mode, you can also allow the DM to select the four starting spells.
Example: Eltrezar starts with a spellbook containing six total spells. Detect Magic and Read Magic he gets automatically. He chooses Magic Missile and Armor right away, and then ponders over the remaining two spells. Without knowing which to select, he has the DM choose for him. The DM chooses Friends and Message. For now, Eltrezar's spellbook is complete.
Step 5: Numbers, Numbers, Numbers!
At this point, your character is probably looking fairly complete except for details such as Saving Throws, movement, encumbrance, etc. This is when you begin filling in the numbers as prescribed by the Players Handbook. Don't worry, everyone else is also annoyed at having to flip back and forth through the book.
Step 6 (or sooner, your choice really): Alignment
Each character will follow an alignment, which actually matters in this edition rather than being the holdover that it is in later editions! Players will not be playing evil characters, though Neutral with Evil tendencies might be fine... just don't act surprised when you are kicked out the the party by the other characters! Some classes have alignment requirements, and many of the races have alignment suggestions!
Example: Eltrezar is a person who tries to bring good into this world, and so he knows that he is at least of a Good alignment. Beyond that, he doesn't feel strongly bound to either lawful behavior or chaotic behavior, and so he opts for Neutral Good. He believes that rules often benefit the world, but must also be flexible or sometimes broken.
Step 7: Take a Break and Stretch
By this point, you've probably been sitting in front of your computer for too long. Stand up, stretch your body, and try moving around. Do your eyes a favor by looking at various objects in the distance outside a window. Also, drink some water. You'll thank me for it.