The Happy Mask Salesman is a mysterious man who specialises in masks, which Link can use for different purposes. He is almost always happy, with few exceptions. He is found in his Happy Mask Shop located in Hyrule Castle town during Link's childhood. Here, Link can borrow masks to sell to people around Hyrule. If Link returns without enough Rupees to repay the Happy Mask Salesman, he will become enraged and kick Link out of the shop. Once Link sells all the masks, he may borrow any of them, as well as a few extras, which are used merely for humorous purposes. The exception is the Mask of Truth, which Link can use to talk to Gossip Stones.
In Majora's Mask he plays an integral role. On his travels to find rare masks, he is ambushed by the Skull Kid and his two fairies, Tatl and Tael; they steal Majora's Mask, a powerful, but malevolent, mask, who becomes the main antagonist. Later, he meets Link inside the Clock Tower in Termina; Link, whom the Skull Kid has cursed into a Deku Scrub, is asked to return the mask and to regain his own Ocarina. Once Link returns with the Ocarina, the Happy Mask Salesman teaches Link the Song of Healing, which transforms Link back into his normal form. Once Link finally destroys Majora, the entity inhabiting the mask, the Happy Mask Salesman regains the now-powerless mask and leaves Link with some advice before walking away then vanishing.
The Happy Mask Salesman shares similar physical features and a strong obsession with masks with the Lunar Children who inhabit the possessed Moon in Majora's Mask. This has led some fans to infer a relationship between them.
IGN ranked him number 4 of the Top 20 Weirdest Zelda Characters.
Source: Wikipedia, "Characters in The Legend of Zelda series," available under the CC-BY-SA License.