i think a majority of responses are in the line of "whatever the player says the PC does is in character"
I think that depends.
On a mature group, everybody's PCs are probably doing things that are in character anyway.
In an imature group (say teenagers), the players want their PCs doing such stupid and inane things that aren't in character for the PC, but in character for an adult paladin being controled by a 15 year old boy to do.
I see a difference in role playing a position on a team (the fighter role), and role playing a character in a shared story (Alandrius the Paladin).
The point of the latter is to define traits about the character and to self-restrict your self to "acting in character". In the case of a paladin, this usually means a code of behavior, etc.
That shouldn't prevent character growth, change and evolution. But it should mean some consistency in behavior within a period of time and self-restraint from taking any and all actions because it is expedient to the player but not to the PC.
Basically, I call shennanigans when a player contradicts his character definition, soley on the basis of game benefit.
I based my half-orc barbarian on Tyler Mane's portrayal of Sabretooth in the first X-men movie, except not a villain, and not entirely nice. With an 8 int, I didn't want to play an idiot, so instead I played him as someone with violent impulses (less talking, more killing), and made sure I never participated in planning sessions.
I interpreted my class and stats, identified with a role model character to emulate, yet still played him differently and consistently.
If I were to pick up his sheet today, and play him like a smooth talking swashbuckling ladies man, that would be out of character for him.
There should be behaviors for any PC that don't fit that PC, because they are out of character.