They appear to be a Sim that has lived alone with little or no contact to the outside world. On their home lot they own a garden with harvestable plants like tomatoes and blackberries, a wood crafting station and a pond, implying an interest in gardening, handiness and fishing. Their house is made almost entirely of wood, implying that they built it alone with their woodworking skills. The hermit also has a high skill in herbalism, and is therefore able to teach visiting Sims how to craft certain potions. In order for Sims to learn the "Fungal Infusion Fertilizer Remedy" they have to become good friends with the hermit, and then select the "Learn Herbalism Recipe". This is the only way to learn the special recipe.
Befriending the hermit is one of the objectives for the third milestone of the Outdoor Enthusiast aspiration. If the hermit moves in to the player's household, they will complete the hidden "No Longer Solitary" achievement.
Like most NPCs in The Sims 4, if the hermit is added to a playable household or if they die, a new hermit will be generated to take their place.