Mercutio is a nobleman related to the Prince, and he is not related to either the Montagues or the Capulets. He is Romeo's friend, but he is not related by blood to either family. Though generally he takes Romeo's part, he stands between the rival families -- and as a symbol of authority by his connection to the overall ruler of Verona.
He is a spirited young man, at home in his strength, youth and bravura. He is of the same or higher rank than Romeo or his friends, and he easily moves among them, making jokes and elaborate, sometimes very bawdy, puns. He is well-educated and particularly imaginative, as is shown by his elaborate speech about his dream about Queen Mab. (I.iii.52-94)
Being neither a Capulet nor a Montague, however, heightens his tendency to be changeable -- or "mecurial" as his name implies. Since he is not formally allied with either family, he has the ability to change sides and get enjoyment from both (such as is evident by the fact that he is invited by the Capulets to their feast, but the Montagues are not.) This means that he can change sides if he wants, and take or leave either of the warring factions. He is a law unto himself. Even Benvolio notes Mercutio's aggressive, easily angered nature:
BEN: An I were so apt to quarrel as thou art, any man
should buy the fee simple of my life for an hour and a quarter. (III.i. 31-3)
Especially Mercutio's death scene, in which he is killed by Tybalt in a fight which he, himself, had started
TYB: Follow me close, for I will speak to them.
Gentlemen, good den. A word with one of you.
MER: And but one word with one of us?
Couple it with something; make it a word and a blow.(40)
he shows his changeable nature when he famously curses the Capulets and Montagues both, even though he was Romeo's friend.
Mercutio is often called a comic foil to Romeo's melancholy love-sickness. When we first meet Mercutio, he is bent on cheering Romeo out of his sadness over the Fair Rosaline. While Romeo is, in the manner of some adolescents, is obsessed with finding a true, passionate love, Mercutio seems to be much more interested in action and merrymaking than sentimental romance.
MER: Nay, gentle Romeo, we must have you dance.
ROM: Not I, believe me. You have dancing shoes(15)
With nimble soles; I have a soul of lead
So stakes me to the ground I cannot move.
MER: You are a lover. Borrow Cupid's wings
And soar with them above a common bound. (I.iv.14-9)
All in all, Mercutio is the picture of the young, carefree nobleman brought low by the poisonous feud of the Montagues and Capulets.