I would define it this way:
Actors are bland enough and plastic enough to be flexible, but who need screen time to generate their characters. Dustin Hoffman, Joan Plowright, Johnny Depp, Meryl Streep, Ian McKellen, Miranda Richardson, John Tutturo, Emma Thompson, and Bob Hoskins leap to mind. Not stunningly attractive, not hideously ugly, but possessing great dexterity with their voices and faces. They can play anything, from leads to bit parts, but often roles which give them enough screen time to make the character come to life.
Movie stars are usually too handsome or beautiful to be convincing in a wide range of roles. You’d never buy Sly Stallone as a restaurant manager, or Brad Pitt as a librarian, or Denise Richards as a nuclear physicist.
Some movie stars can act pretty well, but because of their looks they are often pushed toward certain kinds of roles so long as their looks hold out.
A Character Actor is basically a go-to guy that you get for a small filler role that needs to convey a lot of personality in only a little bit of screen time. Character actors are the kind of people who are distinct enough, in looks and voice and physique, for the audience to stereotype. They get the roles that aren’t on screen long enough for an Actor to work his magic — acting takes time, Character Acting takes a certain je ne sais quoi.
James Tolkan is a hardass. He always plays hardasses. He was the hardass principal in “Back to the Future,” he was a hardass colonel in “WarGames,” he was a hardass cop in, “Masters of the Universe,” he was a hardass in “Top Gun.” Because of his face, his build, his voice, and his baldness, you get the whole Hardass Package in the first few frames you see him, even before he starts acting. James Tolkan is the guy you get when you can’t get character actor Michael Ironside. 
Michael Ensign is the Fussy Intellectual. He played a fussy intellectual hotel manager in “Ghostbusters,” a fussy intellectual security chief in an episode of “Star Trek: The Next Generation,” and a fussy military man (alongside James Tolkan) in “WarGames.” By his looks, his fussy little mustache, and his height, he speaks volumes about what you expect his character to be. When you see James Tolkan and Michael Ensign together in the NORAD war room, you automatically think, “Somebody broke a rule and there’s gonna be trouble now,” just because of how the two look together.
Eddie Deezen is the Nerd. He has a face and a physique that just says “nerd” about him, no matter what role he plays. He’s a nerd in “Grease” and does the voice for the nerd Mandark in “Dexter’s Laboratory.” He also plays the nerd Malvin in “WarGames,” who says, “Go right through Falken’s Maze!” They could’ve had anybody play that role — what, four lines? They picked Eddie because as soon as he leaps on screen, you think “Brainiac nerd.” Plenty of bang for the buck, character-wise.