The word insight comes from Middle English insiht, combining the prefix in- (meaning "in" or "within") and sight  (meaning "vision" or "the act of seeing").  It literally means looking inward or having mental vision.  It may also connect to an older Old English noun, insiht, meaning an "account, narrative, or argument" derived from Germanic roots.  Other Germanic languages formed similar words using the same parts, such as German Einsicht and Dutch inzicht.  

According to the Oxford English Dictionary (OED), the noun "insight" was first used in English around 1175 during the Middle English period.  It first appeared in a religious text called the Ormulum, (a collection of homilies written in verse by an Augustinian canon named Orm).  

Character insight gives a story emotional depth, makes charcter choices believable, and connects the reader to the core message.  It turns a simple sequence of events into a meaningful human experience.  

Why Character Insight Matters:  
Drives the Plot: What a character thinks, fears, and wants dictates their actions and moves the story forward. 
Builds Empathy: Understanding a character's inner truth lets the audience care about their struggles and triumphs.  
Delivers the Theme: Deep personal realizations and internal changes reveal the overall meaning of the narrative.  

Just the facts:

IN SIGHT Definition & Meaning - Merriam-Webster

INSIGHT Synonyms: 74 Similar and Opposite Words | Merriam-Webster Thesaurus

INSIGHTFUL Definition & Meaning - Merriam-Webster