He is a mysterious but malevolent demon or construct that exists to tempt people into using the evil power of the Darkhold - doing so gives his master power and presumely a chance to return to the mortal-world again.
He is an extremely evil creature who manipulates others, often in their moment of weakness, to convince them that using the Darkhold will benefit them when in reality it will almost always cause misfortune to befall them or those they love.
The Dwarf was opposed mainly by a group known as the Darkhold Redeemers (in many ways he could be considered one of the Darkhold Redeemers archenemies since he existed to actively encourage humans into using the often self-destructive magic of the book while the Redeemers were dedicated, on the whole, to destroying the evil artefact) - the Darkhold Redeemers consisted of such heroes as Blade, Dr Strange, Ghost Rider and Morbius.
However the Dwarf proved his skill as a manipulator by convincing one of the Darkhold Redeemers to use one of the pages and due to his magical nature it is safe to assume that the Dwarf may return some time in the future.
The Dwarf has shown the ability to teleport himself and others across undefined distances and is knowledgable on the dark forbidden magic found inside the Darkholm (which is seen, in many ways, to be one of the most powerful Black Magic tomes in Marvel).
He also displays some degree of influence over the minds of his victims, either via magic or sheer cunning the little imp rarely comes across a person he can't sway towards evil.