We get told more about Damon than about any other character in the book (unless you count the heath as a character, that is…). Other characters get imagery and symbolism attached to them, but Hardy really just loves psychoanalyzing this guy. As a result, Damon's characterization tends to be pretty obvious since Hardy just tells us exactly what we need to know about the guy.
To lose the two women – he who had been well-beloved of both – was too ironical an issue to be endured. He could only decently save himself by Thomasin; and once he became her husband, Eustacia's repentance, he thought, would set in for a long and biter term. [...] Full of this resolve to marry in haste, and wring the heart of the proud girl, Wildeve went his way. (2.7.80-1)
If Damon's characterization and actions seem a bit heavy-handed at times, it's fitting. Damon himself tends to go to extremes over things – like marrying someone to stick it to an ex-girlfriend. The obviousness even extends to the character's name: "Wildeve," broken down, becomes "Wild eve," or a wild night. And Damon is definitely a bit wild. He's also a complete jerk.
Damon doesn't need Hardy to make a bad impression for him – he does pretty well on his own. After all, his first actions in the novel involve him standing up his fiancée and then going to flirt with his ex-girlfriend. He's continually described as "careless" in his attitude and his behavior (check out 1.5.53 and 1.6.95). When Damon opens his mouth, he doesn't endear himself to anyone either. As one good example, when Eustacia asks if he loves her, he replies,
I do and I do not. […] That is, I have my times and my seasons. One moment you are too tall, another moment you are too do-nothing, another too melancholy, another too dark, another I don't know what, except - that you are not the whole world to me that you used to be, my dear. But you are a pleasant lady [...]" (1.9.44)
The man is a smart alec, and there's something funny about him even when he's being a total jerk. He so outrageous, that he can be kind of amusing. Still, he's the novel's villain
Or he's the closest approximation to the novel's villain. See, this novel likes to make things complicated, and Damon is far from a cut-and-dried villain. He may be inconsiderate and obnoxious, but he isn't evil, and he never really sets out to cause anyone direct harm (though his selfishness ensures that he often does cause others harm).
Damon's selfishness is evident in his behavior. We already mentioned his crummy treatment of the women in his life. But Damon's treatment of these women is more than just him being a spoiled brat. It also points to his restlessness, which is a crucial aspect of his character. We definitely see this in his relationship with Eustacia. He tosses her aside, then wants her back, and then really wants her after she marries another guy.
To be yearning for the difficult, to be weary of that offered; to care for the remote, to dislike the near; it was Wildeve's nature always. This is the true mark of a man of sentiment. (3.6.65)
It's important to note how the narrator treats Damon here. The last sentence is a dig at Damon and his "feelings." Damon gets made fun of more than any other character, but we can enjoy laughing, since he's so self-centered.
Damon is very fickle, meaning that he changes his mind constantly. So he's a fitting companion to the moody Eustacia. In fact, they're like two peas in a pod. They both hate the heath, they both tend to be impulsive and spoiled, and they both have very questionable decision-making skills.
But they argue a lot too. Damon seems to have genuine feelings for Eustacia, but he also acts like a jerk towards her. Hardy describes this aspect of Damon's character, his rudeness and his charm, in a lot of places. Here's an example:
[…] at one time passionate, upbraiding [...] towards a woman, at another he would treat her with such unparalleled grace as to make previous neglect appear as no discourtesy, injury no insult, interference as a delicate attention, and the ruin of her honor an excess of chivalry. (4.8.24)
But, given how much descriptive attention Wildeve gets from the narrator, it can be easy to overlook Damon's dialogue. However, Damon's dialogue can be as revealing as the details we get about him elsewhere, as revealed by statements like this: "Well, if that means that your marriage is a misfortune to you, you know who is to blame" (4.6.28).
Damon's arrogance really comes into play here – he expects Eustacia to grovel and beg forgiveness. In a way their relationship is all about power. And we can see Damon's competitive streak and his concern with status and power come into play in two other relationships – his tense relationship with Mrs. Yeobright (who never trusts him) and his intense rivalry with Diggory Venn.
We can see all of Damon's character traits come out during the gambling sequence. This chapter does more to assess Damon's character than any other chapter in the novel.
This entire chapter also is crucial to understanding Damon and Diggory's warped relationship. These two men are huge rivals, and they compete all the time. Ostensibly, they are competing over Thomasin. Yet Damon is somewhat bored by his wife. So what is their competition all about?
Wildeve was a nervous and excitable man; and the game was beginning to tell upon his temper. He writhed, fumed, shifted his seat; and the beating of his heart was almost audible. Venn sat with his lips impassively closed and eyes reduced to a pair of unimportant twinkles; he scarcely appeared to breathe. (3.8.11)
The overly-emotional Damon gets increasingly furious at the calm Diggory Venn. The way Damon acts towards Diggory also reveals a lot about their rivalry. Damon thinks he's better than Diggory – socially, economically, probably in terms of looks (if Damon were around today, he'd be the type who spent way too much time putting on hair gel in the morning). Damon also used to be an engineer, and had a much higher social station than a reddleman (1.6.79).
Again, Damon's spoiled, arrogant, and selfish nature come to the fore with Diggory. And the fact that this entire sequence is about gambling is very fitting – Damon is definitely reckless and restless and the idea of him as a "gambler" in his life in general pretty much nails his character. He gambled on his relationship with Thomasin, he gambled that he could win Eustacia back, and he gambled that he could beat Diggory and later Clym.
Damon is always taking on extreme challenges, and but he certainly doesn't always win. The fact that Damon often loses is what makes him somewhat sympathetic and interesting. He's sort of lovable in a way. It's fun to see him get his comeuppance, but we never want him to always lose.