I often hear it said that audiences react to "character." What does this mean exactly?
"Character" in itself is an obtuse word.
Practically, this means the "expression of character while at a particular stage/state along the arc."
What you're trying to do is express the character's state at a particular stage of the journey / arc.
For example, in SILVER LININGS PLAYBOOK (2012), when Pat first arrives home, we want to express that Pat is unable to let go of Nikki, so we have him reading all the books associated with her. Later, we want to express that Pat has let go of Nikki and do it through his throwing her books off his bed (when he gets back from dance practice).