The digital model is a virtual wireframe of points and the edges that connect them. It defines the shape of a character. The wireframe model of Lotso below is a visual representation of what a digital model might look like.
Character design starts with artists who create sketches and clay sculptures, called maquettes, to get each character just right. Then a digital modeler creates a virtual 3D model of the character, sometimes digitally scanning the maquette to use as a reference. Digital Modelers have to understand anatomy, as knowing where the bones and muscles sit affects the surface shape.
Continue to explore using Pixar in a Box, a set of lessons developed by Pixar and Khan Academy. Follow the link for a lesson on Character Modeling.