This is probably the most common form of characterization in the Sherlock Holmes stories. Homes and/or Watson usually just come right out and tell the audience the relevant facts about any given character. This makes sense, given that we are dealing with short stories here. There's just not a ton of room to expand on the minor characters featured in any story, so we instead just get a brief and direct run-down of each story's new group of minor characters, or each cases new cast of victims and suspects. The direct characterization we do get usually involves only a few sentences. The information we get usually includes information relevant to the case at hand – we learn about how and why people committed, were victims, or were witnesses to a crime. In this respect, the direct characterization we get is fairly limited in scope. Holmes and Watson only care about these minor characters in relation to the case at hand. Watson also uses direct characterization to describe Holmes to us.
Since we are dealing with criminal cases here, it stands to reason that the characters in each story are often characterized by their physical appearances. Some cases, like the "Golden Pince-nez" and "Black Peter" are even solved by figuring out a distinctive physical trait of the killer, like bad eyesight or strength. For Holmes, a large part of solving crimes involves figuring out what a suspect might look like. Holmes also makes physical traits an important part of his deduction reasoning, where he takes a small physical trait and deduces, or figures out, something major about a character's personality. Holmes and Watson also have rather limited exposure to the characters in each short story, so it makes sense that a large part of their understanding of these minor characters would be based on physical appearances. They don't have much time to learn anything else about these people.
An action oriented individual, Holmes himself is also concerned with the actions of other people, namely how someone committed a crime. Actions here define the types of criminals that Holmes and Watson encounter, and Watson also frequently describes Holmes to us in terms of his actions. Actually, Watson is probably the only character in these stories who isn't characterized largely by his actions. We rarely hear about Watson's actions since he has adopted a fly-on-the-wall role in order to narrate what everyone else is doing. Instead, we learn more about Watson by his thoughts and his language. Holmes and the other minor characters do talk a lot, and we can learn things about them from their dialogue. But it's important to note that these characters often talk about their actions, not their thoughts and opinions. Holmes explains at length how he went about solving a case and which mental acrobatics her performed to do so. Even thinking is very action-oriented for Holmes. Minor characters, meanwhile, spend most of their dialogue describing what happened, what they did, and how they did it to Holmes and Watson. So speech and thoughts are tied closely to actions in these stories.