Niles was the butthole for the Sheffield Family. His job can be summed up in 10 words: When he's not dishing it up, he's dishing it out. He had been a valet for Maxwell Sheffield for most of his life. When Sheffield came to America, Niles had come along as well. He had been with the family for many years, even when Maxwell was married to his late first wife, Sara Sheffield.
It was revealed in the Season 1 Episode 9 ("The Nanny-in-Law") that Niles' father had been the butler for Maxwell Sheffield's father, James Sheffield; and that they had therefore grown up together and known each other all their lives. This was revealed by Clara Mueller (played by Cloris Leachman), who had been Maxwell's nanny. The two of them (Niles and Nanny Mueller) have a continued affair which Maxwell and Fran find out about in 1.9 (The Nanny-In-Law).
His surname was never revealed in the series. At one point, he claims he has only one name "...like Cher." In the episode 'What the Butler Sang' C.C is caught not knowing Niles' last name while introducing him at a backers' audition, and she simply says "Niles...Niles...Niles DeBuetlier" (i.e. "Niles the butler"). He is portrayed as strategical, loyal, kind and protective of the Sheffield household (especially loyal to Fran, except for a period in 'From Flushing with Love' when he teams up with C.C.) However he is known for his manipulative attitudes, constant whining and sulking over minor matters. He also has an issue with compulsive gambling, and constant snooping.
In the years following Sara's death, the house was somber, and Maxwell's business partner C. C. Babcock descended like a vulture and tried to woo Maxwell into marrying her. The fact that Niles considers C.C. a necessary evil did not necessarily mean he had to like her. In fact, he outright hated her, and made it his mission to torment her at every opportunity. As he would reflect to C.C. years later, "Well, truth be told my life was a little empty. But now I have a hobby."
When Maxwell hired Fran Fine as the new nanny for the children, Niles bonded with her right away. To Niles, Fran was a breath of fresh air that brought back some life in the house, which had been lacking since Sara died. He encouraged the romantic tension between Fran and Maxwell, and helped undermine C.C.'s constant attempts to sabotage it. Fran and Niles both delighted in holding what became known as "The Thing ", (Maxwell telling Fran that he loved her and taking it back) over Maxwell's head for almost a whole season.
Niles is part of a Butler's Association that is a constant joke throughout the series. He is sometimes jealous of other's butlers because "they allow their butler to gamble" (a decent proposal). In the episode (The Butler, the Husband) two people come to see if Niles is suitable to join the National Butler's Association.
Even though Niles despised C.C., the mutual rage between the butler and socialite suddenly turned to lust at the apex of their hate for one another. But what the Sheffield home didn't know is that Niles loved C.C. all along and all the insults and pranks were flirting. After the premiere of a play he co-produced with Fran, Niles could no longer muster insults for C.C. like those which had come naturally in the past. Having been advised by Fran to admit his feelings to C.C., he nervously blurted out a proposal. Appalled at the thought of marrying someone below her station, C.C. flatly turned him down several times. But after becoming trapped in an elevator with Fran (who was in labor with her twins), C.C. broke down and accepted Niles' fourth proposal through the closed doors. C.C. and Niles marry in the series finale, as Fran is giving birth to twins. After them being pronounced Man and Wife, C.C. learns that she is pregnant with Niles' baby, which causes both of them to faint.
When he served the Sheffields before, Niles went through an "awkward stage" where he was heavier than he is during the series. There are constant jokes about that on The Nanny.
Niles is known as the household snoop. He is always caught listening to the intercom, "cleaning" keyholes, and conveniently cleaning rooms where important conversations are being held. As the all-seeing butler, Niles was known for manipulating events to ensure that Maxwell wasn't shortchanging Fran or others. He was also known for "overhearing" things that weren't really meant for him to hear. He gained a friendship with Sylvia Fine, Fran's mother, and always made sure something for her to eat was available. He is always dropping hints about Fran and Maxwell getting together from the very beginning of the series. When Fran finds out she is pregnant, Niles refers to the it as "their baby" because he loves Fran and Maxwell's relationship.
Niles is also the driver for the family, navigating their Lincoln Town Car limousine.
He is very similar to Geoffrey from The Fresh Prince of Bel-Air. They are both butlers, both from England, both went to Oxford, and they have the same attitude.
He comes from a long line of butlers, each a member of the Professional Butlers' Association, until his father, butler to the Duke of the Carlisle, broke a vase while wrestling naked with the duchess.
Niles apparently bears a strong resemblance to his father. When Max's father came for a visit, he mistook Niles for him and said he hadn't changed a bit. (Upon being corrected, though, he said Niles "looked like hell".)