Psychological depth refers to the complex inner lives of characters, revealing their thoughts, emotions, motivations, and conflicts in a way that creates a more realistic and relatable portrayal. This concept is essential in realism, as it allows for a nuanced exploration of human experiences and the intricacies of personal relationships. By focusing on the psychological aspects, writers can delve deeper into the characters' struggles and desires, making their narratives resonate with readers on a personal level.