With Fable II, Lionhead and Microsoft did a great job of hyping customers up before the game's release with online content that tied into the game.  "A Hero's Tale," an interactive puppet show on the Fable II website, allowed players to unlock unique in-game items like a chicken suit or a hero doll.  For Fable III, they're going even further with the interactivity, and allowing players to create an NPC that will appear in the game.

The concept was revealed last night on the podcast of Xbox Live's Major Nelson.  Nelson stated that when players pre-order the game they will receive a code, which will then be used to download the NPC character that players create on the "Make a Villager" website that should be up in a few days that is up now.  Player swill be able to choose a male or female NPC, and select from a variety of heads, hair styles, and outfits to customize their special resident of Albion.  NPCs can be shared between players as well, though names will not transfer.  I wonder why? (Update - Heywood Jablome, Rusty P. Ness, and Dildo McStinkfinger just told me why.)

The big difference between "Make a Villager" and "A Hero's Tale" seems to be that only pre-order customers will be able to fully utilize the feature.  Fable II's online promotion is actually still going, meaning that players who bought a $10 copy of the game yesterday are still able to score that sweet chicken suit.  For those who don't pre-order, the customizer will still be available, but their characters won't transfer to the game.  That's a lonely existence for these poor villagers, so please don't create a character unless you plan on incorporating them into your Fable II universe.

[Source]