What I been doing for the past five or six years is regardless of the system I am using I try to come up with a concise list of classes/templates, and races/cultures. I pitch possible areas of the setting where they can start at along with various initial situation. Through a back and forth conversation we arrive at a consensus.
Then I do a informal pre-game interview with each player to gauge want they want to play and their level of interest. From that I give them what they need to generate the character, write up a background giving what their character know from their point of view. Both presented as tersely as possible.
Example from a recent campaign
- a halfling knight riding a pig as a mount from Limerick Shire.
- A cleric of Hamakhis, a death god, who left temple and the demands of his father to become a pirate on the high seas. Still wants to serve Hamakhis and eventually gain enough power to become the next Vecna (i.e. my setting's equivalent). for the greater glory of Hamakhis.
- A merchant adventurer striking out on his own from his merchant house. He is not one good terms with his father. This was followed by a two page write up of what he knew about the economics, merchants, and trade details of the region. Most of it was traveller style lists.
- The second player wanted to play a full blood Viridian, a demonic race that part of my Majestic Wilderlands. He is essentially a underground mage. He was bought by his master and trained as a artificer, a type of magic user in my setting, eventually winning enough of his respect to win his freedom. They parted on friendly terms and have a patron client relationship. He got a page on how the underground magic society of black magic, demonic sorcery, etc of Viridistan the City State of the ex World Emperor (killed by PCs two decades ago in real time).
I tweaked each of their backgrounds so they had reason to cooperate on their broad goals .
Beyond that all I gave them a concise write up of the larger world. i.e. City State of the Invincible Overlord to the east, Desert to the south, and so forth and so on. Try to limit to a paragraph or two.
Basically a even more concise version what I wrote in my Majestic Wilderlands supplement throwing everything that a inhabitant of Viridistan Region would not know.
Oh and there were maps accompanying all this just because I like doing that sort of thing.