Mr. Snuggles is Billy's old hamster. He was the whole reason Grim came in the first place and became the kids' best friend/slave to begin with.
Grim challenged Billy and Mandy to limbo over Mr. Snuggles and Billy, if Billy and Mandy won, Grim could not reap Mr. Snuggles, and would have to be Billy and Mandy's best friend forever. Grim would have won, as he set the bar as low as he could without touching the ground, but before he went, he asked Mandy the question: "Any last words?" she replied, "Just two, kiss kiss" which was the trigger Billy used to make Mr. Snuggles bite him, so Mr. Snuggles jumped down and bit Grim on the face, causing him to stumble around and hit the limbo bar, and therefore, Grim became Billy and Mandy's best friend forever.
He is very old when he is seen in the show. His only major role was in the pilot but he had made a few cameos in some episodes. In The Incredible Shrinking Mandy, he rescued Milkshakes from a fire and performed CPR on her only for her to eat him, later on he escapes.
Some summaries erroneously state that Mr. Snuggles is sick even though he has never shown any symptoms of being so, though Grim described him as being sick in Mortal Dilemma.