Characters are the personages found in any work of fiction. In fighting games, they are your “fighter”, and tend to be highly identifiable by look.
Characters tend to be humans, but may also be represented as anthropomorphs, animals, or machines, among other things. They have representative traits, such as appearance, personality, and disposition (which is also “character” in another sense).
The term “character” in fighting games almost always refers to the characters you use to fight; these are known as player characters or playable characters.
Sometimes some moves will allow you to call out characters, and this is how they make their appearance (maybe the only way, too). These are support characters.
The hero, or less often just the protagonist, is one sort of character. He or she is the type that the story of the game pivots around.
Originally, with the paragon being Ryū from the Street Fighter series, and other early examples being Hattori Hanzō Masanari from the World Heroes series and Haōmaru from the Samurai Shodown series, the hero would be a straightforward person seeking truth. But gradually, the trend turned towards more pretty or charismatic types like Kusanagi Kyō and Rock Howard.
Excepting games like Arcana Heart or Melty Blood where the proportion of females is very high, heroes are almost always young men.
There are exceptions to this rule, though; the 50-or-so Mishima Heihachi was the protagonist of Tekken 2, and Sol Badguy of Guilty Gear has the appearance of an adult (and a stated age of 150 or more!).
As is often the case, there are often rivals to the hero. They often have no relation to the hero in appearance; pretty boys like Yagami Iori or Ky Kiske abound somewhat, but as it is found often in older media such as anime, this phenomenon is not endemic to fighting games alone.
Heroes are often the tie-ins for minor characters and usually affect the story the most, but there are exceptions as well (such as Aino Heart from the Arcana Heart series).
For longer-running series like Samurai Shodown, The King of Fighters, or Street Fighter, at critical points in the story, and often accompanying major shifts in the system, the position of protagonist will often change over to someone else (often creating a sub-series in effect, if not in name). This is often done to signify generational shifts and such.
However, older heroes will usually be in the lineup along with the newer one; there have been times where the new one doesn’t really stand out, and was replaced (or the series discontinued: it happened to poor Alex from Street Fighter III, where he got kind of sidelined before New Generation was even released).
At the character selection screen, most games will start off the cursor for the first player right on the hero, but for newer generations, it will sometimes start over the older hero (once again, Alex from Street Fighter III is the example of this: he does not get this default position until 3rd Strike, two years after the release of New Generation).
In the beginning, many heroes had a headband (taking after Ryū). Game magazines of those days would often joke that Joe Higashi was the true protagonist of Fatal Fury (though personally, I think SNK should be commended for thinking outside the box a little and starring someone besides a Japanese person, which was the more typical practice among Japanese game developers in that time; it could also be argued that the simplistic plots of earlier fighting games often took after 1980’s Amercan action films, though).
But just as Star Wars turned out in the end (which, as the story unraveled backwards in time, focused less on Luke Skywalker and more on Anakin Skywalker), there are those who (in no small numbers) due to the worldview, themes, etc. would argue that the true protagonists are those in opposition to the heroes such as the bosses. With popularity as a villain, they literally ‘take on’ the leading roles.
Those who line up with this include Geese Howard (Fatal Fury), Kyōgoku Hinowanoka Gaō (Samurai Shodown V), and Raō (Hokuto no Ken).
Vega (the dictator from Street Fighter II) originally sought strength, more so than Ryū, even; however, the representative of this is now Gōki.
Among those who don’t know the fighting game genre too well, Ryū and Terry Bogard are still somewhat well-recognized, and can be called representative of fighting games.
Also, even second-generation heroes and such can even be featured prominently in the title and still end up a minor character. Alex (SFIII), Rick Strowd (RBFF2), Hisame Shizumaru (SSIII), and Kazama Kadzuki (SSIV) would fit this assessment. Some, such as Ray McDougall (FH series) can be unrecognized from the get-go. It can get more ignoble than that, though: Liu Kang (MK series) gets murdered by his longtime enemy Shang Tsung.
There are also protagonists that make their first protagonist appearance on the side (like Sion Eltnam Atlasia; in the visual novelTsukihime on which Melty Blood is based, the protagonist is Toono Shiki). Some protagonists don’t start off highlighted by the cursor, either.
There are also cases where the rival characters are often mistaken for the heroes, such as with Ash Crimson (KOF 2003–XII) and Sol Badguy (GG series). Sol isn’t once depicted as the protagonist in other media besides the games (Ky being judged more recognizable by some), whereas Ash was intended to be a villain from the start (however charming he may be).
Aino Heart seems like the protagonist of Arcana Heart nominally as well as in her movements, but she doesn’t have much going for her beyond that; rather, she kind of bumbles around in the affairs of the others, so there is some doubt of her standing among the playerbase. Morever, the sequel puts more focus on the three new characters and connections to Tokinomiya Kamui, further relegating her to the position of a meddler.
More major characters tend to be better-featured within the game and its advertising materials, so the assumption is that beginners with no better indicators will tend to try them out first. Thus, they are usually the more easier-to-use characters.
Most protagonists have fundamentals that can be learned in one sitting; simple combos; and rushing moves, projectiles, and anti-air moves that work in tandem. Lots of them can use the so-called fireball trap.
There is a considerable minority, however, of more intermediate- or advanced-player-oriented protagonists such as Alex from SFIII (does lots of damage per hit, but slightly tough to use), Kusanagi Kyō from KOF ’96 onwards (lots of focus on derived moves), Rock Howard from Mark of the Wolves (standard move set, but only moderate ability to each move), and Ash Crimson from KOF 2003 onwards (he’s a charge character).
There are also protagonists who don’t have projectiles (or have them, but with short range). The aforementioned Kyō is one (excepting his appearances in KOF ’94, ’95, and XI as of the time of this writing), as is Billy Lee from Double Dragon, Aino Heart, Alex, Tokugawa Yoshitora, Katō Tetsuo from Fighting Layer, Sol (the range was shortened in GGX and stayed that way), and Ragna the Bloodedge from Blazblue, just to name a few. The latter two face Ky Kiske and Jin Kisaragi respectively, who do have projectiles.