Dr Hyde has three possible incarnations: (1) normal human, (2) blue human, (3) werewolf.
His first name "Prometheus" indicates that he is the type of scientist who is not afraid to play with fire, and to cross the line. His last name is a play on R.L. Stevenson's "The Strange Case of Dr Jekyll and Mr Hyde".
In the "Direct" Story
Dr Hyde is the CEO of the Hyde Dynamic science facility, located less than a mile outside Strangetown. He also has a private lab-residence in Strangetown, next to Olive Specter's estate, but nearer to the main street.
As an employer, Dr Hyde values intelligent and conscientious sims who produce good work, whether or not they are Hyde Dynamic official employees. As a neighbor, he is seen by the Strangetown residents as a quiet loner who is selective of his visitors.
Sim vs Watcher Dynamics
Dr Hyde is simultaneously a Watcher and sim. He retains his Watcher powers while relating as a sim to other sims. This "double-nature" causes some confusion and hilarity.
Dr Hyde's presence in STM is a commentary on how sims players relate to their game. He has a direct debate with Bianca Monty in STM 1.10 & 1.11, where they discuss the power politics between Watchers and sims. For example, Bianca can protest as much as she likes, but Dr Hyde has the final word as the Watcher. Yet as a sim, he respects her as an equal.
Sims players are more likely to appreciate the full meaning behind the "Bianca vs Hyde" episodes if they focus on the presentation of the "Sim vs Watcher" issues, instead of how Hyde's person is not representative of their own demographic. In fact, STM's unique perspective is a result of Hyde not fitting the usual demographic of Sims storytellers / machinima directors.
It is easier to portray a "direct" story than such abstract ideas in a machinima show. So it's possible to appreciate Dr. Hyde both as a STM character, and as the guy who thought of, & successfully created, a Sims machinima show featuring complex, bizarre ideas.