The Rotten Apple Head, also called a Kandarian Demon, is the evil spirit of the Necronomicon manifested in the flesh. It appears at the end Evil Dead II, while it is in its spirit-form throughout the rest of the film, The Evil Dead, and a brief moment in Army of Darkness.
The spirit has the power to possess people and make them evil. If the pages from the Necromicon are recited, this evil will rise from the dark woods to find souls. In another passage of the book, some words will have the spirit manifest it self in the flesh. It appears to absorb the souls of those it possesses, or at least mimic them, as their heads are on its face and can be heard talking. It taunted Ash that it won the battle when Annie is stabbed in the back with the Dagger by Ash's possessed severed hand. However, Annie managed to stay alive and conscious long enough to finish reciting the passages, sending Rotten Apple Head through the rift that was previously opened up in the woods.
Outside of "Evil Dead 2"
Shortly after the filming of Evil Dead 2, Rotten Apple Head found a home in a Haunted House later that year (1986) near the school where Evil Dead 2 was filmed because the prop was too big to be moved back to Detroit.