When Doctor Mortimer presents Holmes with his battered manuscript of the story of the Hound of Baskervilles, we are immediately hooked. This legend has it all: family curses, punishment of wrongdoing, ghosts, and dramatic language ("forbear from crossing the moor in those dark hours when the powers of evil are exalted"! (2.23)). What more could you want from a horror story than a flame-breathing devil dog hunting down the sinner Hugo Baskerville?
But here's the thing: while Doctor Mortimer and Sir Charles Baskerville may take the legend of the Hound as fact, it is clearly superstition. A hell beast that hunts down bad Baskervilles? Not too likely, guys.
The real Hound in this novel is Holmes himself. Holmes is the modern arm of the law, figuring out Stapleton's crimes and sending him down into the Grimpen Mire. If Stapleton is almost like a "reincarnation" (13.63) of Hugo Baskerville, then Holmes is the equivalent of the Hound (without the floppy ears) that brings Hugo Baskerville down for the murder of his innocent neighbor.
These two stories, the Hound narrative and the Holmes narrative, give us two different versions of justice. The Hound provides justice as an otherworldly force swooping in to punish evildoers. As the rational detective, Holmes' justice belongs to the modern age of science and logic.
Hounds, as Shmoop knows from watching the Westminster Kennel Club Show, are a breed of dogs that track down prey. It's no coincidence that so many of them are in the detective business.
In this story, the Hound can also be seen as symbolizing the powerful forces of family history and ancestry that sometimes we can't escape. The past can definitely come back to "haunt" us, even if the haunting isn't supernatural.