Oof. Welcome to Problematictown, Population: Jar Jar Binks. (And the rest of the Gungans. And Watto.)
But we'll save the reasons that people cringe when they see Jar Jar for the end. First: what is Jar Jar Binks (besides a dead ringer for an aquatic donkey).
Jar Jar Binks is a Gungan, a race of aquatic beings living on the planet Naboo. He's clumsy, not all that bright, and has a penchant for getting himself into trouble. When we first meet him, he's already been banished from his home for being clumsy, or, as he puts it:
"Mesa caused mabbe one, two-y little bitty axadentes, huh? Yud-say boom da gasser, den crashin der boss's heyblibber, den banished."
(We've all been there, guy.)
In terms of story, Jar Jar is really only there to advance the plot. He shows Qui-Gon and Obi-Wan where the Gungan underwater city is and later takes Padmé to the Gungan sacred place. So why does the movie insist on giving him so much screen time? (Other than the fact that George Lucas spent millions on all the tech to get his CGI right, of course.)
Like C-3P0 before him, Jar Jar's main purpose is to lighten the mood as comic relief. The Phantom Menace is a fun adventure, but it also deals with loss, murder, slavery, political corruption, and the militaristic occupation of a sovereign nation. Sounds entertaining for all ages, right?
Jar Jar's clumsy antics lighten the mood in his scenes, giving the audience a change of tone from the more serious stuff. Consider the following scene:
ANAKIN: Hey, Jar Jar. Keep away from those energy binders. If your hand gets caught in the beam, it's gonna go numb for hours.
JAR JAR: Sorry. Okay. [Yelps as head gets caught in the beam.] [Muffled.] My tongue is fat. My tongue—wrench.
In the scenes before this one, Qui-Gon decides to put the fate of the Naboo in the hands of a ten-year-old boy, who's going to put his life at risk to win the money he needs. He's also learned that Anakin's birth was under unusual circumstances, and Shmi has begged Qui-Gon to take her son away from a life of slavery. Heavy stuff.
Jar Jar's antics hit a tonal reset button on the mood, balancing the dramatic with the comical and ensuring the film never dwells too long on its less child-friendly elements.
The Gungan also takes scenes that would be harrowing in non-movie life, such as the battle between the Gungans and the droid army, and establishes that this isn't real life. Because let's be honest: in real life, natural selection would have sent Jar Jar to the evolutionary discard pile by now.
Th-Th-Th-That's All Folks!
As C-3P0 tells R2-D2, "You know, I find that Jar Jar creature to be a little… odd." And it's kind of surreal that the comic relief of the previous films is openly perplexed about the comic relief of this film.
And 3P0 has every right to be confused, as the type of comedy employed by Jar Jar is very unique for Star Wars. The Gungan's comedic bits come from the Looney Tunes-stylebook of comedy, adding a cartoon element that is lacking in the other films.
Consider the battle scene between the Gungan and droid army. Jar Jar accidentally gets his foot caught in a droid and uses it to shoot the other droids attacking him. Explosions flip him through the air to land comically between the legs on a tank's cannon. Then he fumbles with a booma before dropping it in the perfect place to destroy the tank. It could only be more Chuck Jones if the tanks had been made by the Acme Corporation.
This cartoony effect is accentuated by Jar Jar's tendency to overexaggerate, well, everything. The way he walks is loose and limber. Aside from one somber scene with Amidala, where they discuss the fate of their people, his reactions to any event are over the top. And his voice is, well, just listen:
"Ohh, maxi big, da Force. Well dat smells stickowiff."
A Caricature? Or Just Another Alien?
Jar Jar has ultimately proven a controversial character in Star Wars history. Some people think his inclusion as the comic relief did its job fine. Other fans—let's be honest, most fans—thought his type of humor didn't belong in a Star Wars film. (Source)
But that's only the tip of the anti-Jar Jar iceberg (and that iceberg is big enough to sink an intergalactic Titanic).
The big beef that people had with Jar Jar is that he's a little too close to an ugly racial stereotype for comfort. His skin may be orange, but people said that his accent sounds distinctly Jamaican. (Source)
And not only that, but his character—that of a goofy sidekick—made people think back to the insanely racist African American caricatures that plagued film and TV in the early part of the 20th century:
"There was something about [Jar Jar's] demeanor that suggested blackness and that suggested, more specifically, stereotypical blackness," says Michael Dyson, professor of African-American studies at Columbia University. […]
The issue has even been raised in newspaper reviews. From The Globe and Mail: "Jar Jar has a loose-jointed amble of a black drag queen." The Wall Street Journal called the character, "a Rastafarian Stepin Fetchit." (Fetchit was the actor who critics say personified negative black stereotypes in the 1920s and '30s.) (Source)
George Lucas disagreed, saying:
"How in the world you could take an orange amphibian and say that he's a Jamaican? It's completely absurd. Believe me, Jar Jar was not drawn from a Jamaican, from any stretch of the imagination." (Source)
But the comparison stood. Search "Jar Jar Binks" today and you'll find articles such as "Meesa-understood: The Tragedy of Jar Jar Binks," and "Why Has Jar Jar Binks Been Banished From the Star Wars Universe?"
But you'll also find fan theories on how Jar Jar is actually a Sith Lord, and the biggest antagonist to hit the galaxy far, far away since Palpatine himself. We'll let you uncover those on your own steam, though.