This frightful individual is from This House Has People In It, a ten minute youtube video that unlocks 2+ hours of hidden video and audio recordings. Viewer discretion advised. The video is made by Alan Resnick, who uses confusion based fear. While there is a lot of tension building, a big plus of it is there are no jumpscares, though the audio recordings do have some screams. If you choose to learn more and unravel the mystery, you'll need the frame by frame chrome extension and the inability to feel fear.

See also: Boom Cat/Boomy

About this skin in particular; this is Pink Guy. This friendly fellow appears in the backgrounds and frame by frame analyzing the frame by frame areas of hidden videos. Since you only see him in hidden areas, you do eventually see his true colors (literally and figuratively), but in his first appearances he is in black and white.
And yeah, he's wearing a kid's bed sheets.
I apologize for the poor quality as I haven't actually made a skin in six months.

Anyways, a friend wanted me to make him and here he is.
If you do want to go into the theorizing and such, it is not for the faint of heart.