There is no simple way to describe this amazing character. He's funny and bad-ass in a great, sarcastic sort of way. He was sired by Drusilla in the late 1800s, as we saw in "Fool For Love". As a human, William (as he was called back then) was a poet, made fun of by the people around him for his bad poetry. He encountered Dru one night and became a vampire. He eventually came to be known as Spike, because of how he tortured his victims with railroad spikes.
He killed two Slayers, one in China and one in New York, and came to Sunnydale to add a third tally mark by killing Buffy. He attempted many times to kill her but each time she managed to get out of it. When Angel turned evil, Spike loathed the way Angel was all over Dru all the time. So when Angel attempted to suck the world into hell, Spike allied himself with Buffy and eventually took Dru away.
Dru dumped him and Spike came back to Sunnydale, where he later on ended up staying at. He was captured by the Initiative, a government sponsored institution that captured demons to study them, which placed a chip in his brain that caused him great pain whenever he tried to feed or harm a living creature. This is why he became a "reluctant good guy", helping the Scooby Gang (usually after they payed him, though) whenever they needed something.
Lately, he has fallen inlove with Buffy (or at least, he thinks he's inlove with her), who is extremely disgusted with this.
Spike: Hi, Buffy.
Buffy: Don't take this the wrong way but...
Buffy: What are you doing here? Five words or less.
Spike: Out... for... a... walk... bitch.
Buffy: Out for a walk at night by my house. No one has time for this, William.
Spike: On your merry way, then. You know, contrary to one's self-involved world-view, your house happens to be directly between parts... and other parts of this town. And I would pass by in the day but I feel I'm outgrowing my whole "burst into flame" phase.
Buffy: Fine. Keep going, I cut you a break.
Spike: Oh, yeah. Okay, let me guess... you won't kill me? Wooo... the whole crowd-pleasing threats-and-swagger routine. How stunningly original. You know, I'm just passing through. Satisfied? You know, I really hope so because God knows you need some satisfaction in life besides shagging Captain Cardboard and I never really liked you anyway and... and you have stupid hair.