The nature of a second-order linear time-invariant (LTI) system is determined by the roots of its characteristic equation (the denominator of the transfer function set to zero). The discriminant of the quadratic equation ($b^2 - 4ac$) dictates the damping behavior: zero discriminant for critical damping, positive for overdamping, and negative for underdamping. Stability is determined by the sign of the real part of the roots; negative real parts indicate stability.