Depp sets this performance up with the proposition of a character of almost constant optimism. This is not to say that the character does not suffer highs and lows, but the basis of Depp's performance is that Wood will always look on the up side of life. Honestly this was the right approach for the role of Ed Wood as if he was a guy who really took every failure to heart this would become one depressing picture very quickly. Depp's approach though prevents this from happening with the constant enthusiasm he brings to the part, even when Wood has nothing to be happy about.
This is not nearly as simple as it might sound though as even though Depp keeps this act up throughout he also avoids the problems that could have easily have come from such a style. Depp most importantly is always genuine in this style. He never tries to make Wood a parody in this behavior, rather he is always earnest in Wood's refusal to be pessimistic. Doing this actually makes it funnier, and allows Wood to be an endearing character through his always bright and always hopeful expression that follows just about any let down including when he is told one of his films was the worst a film executive ever saw.
The overarching feelings of Depp's characterization is this hope and he importantly shows where at least part of this comes from. It is a strange idea for Wood to keep making these movies even though few want to watch them, and even fewer have anything nice to say about them. Depp makes it quite clear that the reason above else for Wood's movie making is his love of doing it. Depp never is down in the filming scenes, and he honestly really sells Wood as a man who just adores what he is doing, and really can barely notice that he is bad at it. Depp manages to explain why he doesn't stop, or even notice that he is terrible at it because Depp's portrayal of Wood's dedication to his "art" is that of pure passion.
What Depp does importantly though is he actually isn't one note as Wood, despite Wood always being upbeat. Yes Wood is always up beat in at least some way, but that does not mean that Depp portrays him as always exactly the same. Depp manages to show that Wood does suffer from set back and problems, and he will be brought down by them even though he will never become completely depressed. Depp is able to show that the optimism in Wood is the overarching factor of Ed Wood as man, but still properly portrays that he can still feel down at times. The key though is Depp never shows the optimism ever going away and that the element in the man is a constant that even when he is down it will not take much to make him happy again.
Now Depp's performance is not the best performance in this film that obviously belongs to Martin Landau's masterful work as Bela Lugosi. Depp though knows how to play off of Landau's incredible performance by taking the right place in their scenes together. Depp handles these scenes very nicely by once again being genuine this time the genuine feelings are that of adoration Wood feels to his idol. Their scenes really are quite poignant together as Landau in such a heartbreaking fashion portrays the last end of a one great star, but Depp properly counterpoints this by showing an undying dedication of a fan who could never give up on this man no matter how far he has fallen. The relationship is made surprisingly heartfelt and entirely authentic by Landau and Depp.
Depp's way of usually going out on a limb with his performances does not work when it seems just purely self indulgence or it is rather misplaced such as his performance as Willy Wonka which poorly uses some of the mannerisms that he utilizes here. Depp's performance this time absolutely works for Ed Wood as a character that. Not only does it make his character work, but his performance also makes the film work as well as it does. The film would have been quite problematic if Wood as character ever seemed aware of his abilities as a filmmaker, or even as well if he just simply was just a simple one note comedic device. Depp though finds the right tone for his performance to allow him to be amusing as Ed Wood, but as well actually makes him into someone that we can relate to and sympathize with even in his sometimes rather peculiar plights.