There are essentially two ways or paradigms of Character Gerneration - one where you are creating a character, and one where you are re-creating a character. Hear me out! If you already have a firm character concept, you are essentially re-creating the character that is in your mind - so the choices you make are based on how to get the character to look like what you have already decided. If you don't have an established character concept, then what your character is like is based on the choices you make as you go through life. Some people go one way, and some the other, and some fall somewhere between.
Some chargen methods are better at one than the other. Point allocation chargen, for example, is better at the former paradigm, while random and/or lifepath chargen is better at the latter, though you can work it either way - it's just going against the grain a bit. This does lead to problems occasionally, as people don't understand what they are trying to do, and why making this character is so difficult in this system, or why they get puzzled and confused over how they are supposed to pick and choose this or that skill or power.
The default assumption for random chargen is that you are starting with a tabula rasa, a clean slate, and each operation builds upon the last, culminating at the end in a character. It's a process of discovery. You have no more idea than anyone else what the character will be at the end. Much is usually left to discover in play as well. Personalities, loves, enmities, and such are usually not generated.
The default assumption for lifepath generation is that you have a general direction you want to go in, but the particulars are not determined. By picking a path, you limit your choices to those germane to the path, so the character has some general form before actual creation. It's a bit of a compromise, which can be slanted one way or another by making it random or determined. With random lifepaths, you pick a direction - a path - but the choices within that direction are random. With determined lifepaths, you pick what you want from lists, so it is less discovery and more crafting. Many lifepaths can also furnish the character with life events, histories, and even personalities.
The default assumption for point buy generation is that you know what you want to end up with, and the chargen system is there to make sure everyone is approximately equal. Since you have a limited number of points to allocate, you build as close an approximation of your final goal as possible with your points at hand. The joy is in the crafting, the building, of the character. Most times point allocation systems have a method of gaining extra points by taking disadvantages, theoretically furnishing the character with some hooks as to history and personality, though it needs interpretation.
No chargen system is ideal for all gamers. Which method you pick shows a lot about what your default gaming values are - discovery, or crafting? - and whether character balance is important or not. There are many shades of compromise too - this is a spectrum, not a set of discrete points! This point all too often gets lost in debate, especially internet debate.