This is when a character who was computer-controlled (as anNPC or as aBoss) in one installment of a series becomes a potentialplayer-controlled character through the course of the game, or in sequels. They may be hidden unlockable characters, you might get the chance to recruit them, or they might be presented outright at the character select screen.
Typically they are more powerful than your average "normal" character, though of course they may end up a lot weaker than when they were boss characters (expect their HP to be divided by a factor of 10). This may be due to aRedemption Demotion or forPVP balancing. It's also possible that the game has played up a bad guy as such, only for him to become playable near the end of the game. There is noHeel Face Turn involved; just the bad guy doing stuff on his own or justpassively riding the plot along.
Beating the game with/as one of these characters usually reveals a special type of end-game victory screen. A fighting game series of sufficient length will almost always resort to this.