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Mike Hanlon is characterized most prominently by two things: the fact that he ultimately knows more about the dark history of Derry than anyone else, and the fact that he is literally the only black kid in the entire town of Derry.
And those two aspects of his character end up intersecting.
Mike Hanlon is a straight-A student, a kid who plays the trombone in marching band, and someone who inherited from his father a fascination with local history. He uses this history, and the resources he has access to, to shed light on what exactly It is. By showing the other Losers his father's scrapbook of historical local clippings, he proves that Pennywise is as much a part of Derry as harsh winters and mosquito-filled summers. And this knowledge helps the gang realize the true nature of It…and how to stop It.
Mike first sees It as a massive, sharp-beaked bird. We're given a few reasons for this throughout the book.
One is that Mike has just seen the Japanese movie Rodan, about a bird-monster (or, more accurately, bird-kaiju) that terrorizes a small mining community on the island of Kyushu. It sounds like a fairly freaky movie.
The second, given by It itself, is that Mike was attacked by a bird when he was an infant. This attack led to a very reasonable bird-phobia.
But the reason that we think resonates the most has to do with Mike's father.
Mike's father was stationed in Derry back when he was a soldier…and back when vitriolic racism was the name of the game in Derry. The black soldiers weren't allowed to drink with white townsmen or fellow soldiers; they had to do their partying in an old shack on the corner of the compound grounds. However, Mike's dad and his buddies made lemonade out of bigoted lemons and started a jazz club. It was the toast of the town…until a group of white supremacist terrorists burned it down, killing eighty people in the process.
Mike's father survived, and recalls seeing a giant bird floating above the burning shack—the same bird, in fact, that Mike sees years later.
So we read Mike's encounter with Big Bird Gone Wrong as highlighting a few things at once: the fact of his blackness, the abuse he encounters as a result of it, and his fascination with local history.
Despite having a rough childhood, not least because bully Henry Bowers keeps tormenting him in increasingly sadistic ways, Mike stays around Derry. The rest of the Losers end up having lucrative and glamorous careers, but Mike is happy to putter about and dig up local history.
Part of this has to do with duty: it becomes clear that someone needs to stick around Derry in order to keep an eye on It. Mike becomes a watchman, keeping tabs on nefarious happenings and biding his time until it's time to phone the Losers and tell them to get their butts back to RacistMcHauntedsville—er, Derry.
Side note: It was written a while ago, its true. But still...Mike's character revolves around being black in a pretty reductive, token-esque way. In fact, the combination of his knowledge and wisdom and his race make him align to the problematic trope of the Magical N**** in a way that's more than a little icky.