Right now I'm rereading the Ender's Game series by Orson Scott Card. He's one of my favorite authors. I read his writing and realize I've got a long way to go (which should logically make me not like him, right? Perhaps I'm a masochist, or I just like to understand what good writing is supposed to look like even if I can't duplicate it yet).
In the intro, he talked about how he came up with the idea for Ender's Game and Speaker for the Dead. In the later book he has a character with a handful of children who are all pivotal to the plot. An author friend of his read the manuscript and complained that he was having a hard time telling all the children apart. Orson Scott Card realized that what it really meant was that he hadn't developed those characters well enough that they stood out as distinct individuals. Since I had just received the same criticism lately, I thought this insight was very... well, insightful.
So I paid close attention as I read to how he distinguished these characters, especially in scenes where there were multiple ones all together. I noticed that he constantly referenced each of them in the scene, even if they weren't the ones speaking. They were still doing something-- standing, sulking in the corner, smiling, or in one case peeing on someone else's leg. Whatever the case, their physical actions were mentioned-- and those actions were as indicative of their character as their dialog.
He also pointed out that writing a story with a lot of characters is difficult, because there are so many relationships you have to work out. Not only the relationships they each have with each other, but also how all the characters relate as a whole. On top of that, you have to keep in mind that different people act differently depending on who they're with (who doesn't act different with a parent than they do when they're with their friends, especially as a youth). So you are not only developing multiple characters, but multiple variations of each of those characters as well.
Whew! Writing can be exhausting. It also makes me realize why I'm so absent-minded. With all those extra people in my head, it's a wonder I can still remember my children's names.