"How Shakespeare Became Shakespeare" is the subtitle of Stephen Greenblatt's Will in the World, a new (2004) biography of the Immortal Bard. Greenblatt neatly explains the motivation for his book near the beginning of Chapter 4 ("Wooing, Wedding, and Repenting"):
... [T]he whole impulse to explore Shakespeare's life arises from the powerful conviction that his plays and poems spring not only from other plays and poems but from things he knew firsthand, in his body and soul.
In 1949 Marchette Chute authored a popular bio-history, Shakespeare in London. It's extraordinarily well-written; a decade or so ago I read it aloud to the kids, a few pages at a time over many evenings. In many ways Will in the World is a 21st Century update of Chute, with more sexuality but little additional data. Hard evidence of William Shakespeare's life is so scanty that of necessity an honest retrospective must be replete with speculation: "would", "might", "perhaps", "could", "may", "if", etc.
Greenblatt does a good job of sailing among those weasel-word reefs, and his prose swells to near-poetry at many stages of the journey. In Chapter 6 ("Life in the Suburbs"), for example, he theorizes how a performance of the play Tamburlaine could have influenced a young William:
The actor in Shakespeare would have perceived what was powerful in Alleyn's interpretation of Tamburlaine, but the poet in him understood something else: the magic that was drawing audiences did not reside entirely in the actor's fine voice, nor even in the hero's daring vision of the blissful object at which he lunges, the earthy crown. The hushed crowd was already tasting Tamburlaine's power in the unprecedented energy and commanding eloquence of the play's blank verse—the dynamic flow of unrhymed five-stress, ten-syllable lines—that the author, Christopher Marlowe, had mastered for the stage. This verse, like the dream of what ordinary speech would be like were human beings something greater than they are, was by no means only bombast and bragging. Its appeal lay in its own "wondrous architecture": its subtle rhythms, the way in which a succession of monosyllables suddenly flowers into the word "aspiring," the pleasure of hearing "fruit" become "fruition."
Shakespeare had never heard anything quite like this before—certainly not in the morality plays or mystery cycles he had watched back in Warwickshire. He must have said to himself something like, "You are not in Stratford anymore." ...
And later, in Chapter 8 ("Master-Mistress"), Greenblatt identifies the wellspring of some of the Bard's magical powers:
... Venus and Adonis is a spectacular display of Shakespeare's signature characteristic, his astonishing capacity to be everywhere and nowhere, to assume all positions and to slip free of all constraints. The capacity depends upon a simultaneous, deeply paradoxical achievement of proximity and distance, intimacy and detachment. How otherwise would it be possible to be in so many places at once? Shakespeare offers here in a weirdly concentrated form the sensibility that enabled him to write his plays.