What makes Pyramid Head symbolic is that he is a major element in Silent Hill's gloomy history. Pyramid Head is considered to be the embodiment of James's suffering (in the Silent Hill 2 storyline), and he is also a servant of Samael (from Silent Hill 1). Pyramid Head was an executioner during the Age of Our Founding Fathers in this ghost town (literally a ghost town), an executioner of the guilty at least.
Silent Hill is what you make of it. If you are guilty, Pyramid Head will come for you. Maybe even if you are innocent, you must avoid him at all costs....after all, he is one spooky bastard! @.@
a.) The embodiment of James' suffering and/or guilt.
b.) The embodiment of James' sexual frustration with his dead wife. This would explain his gestures of dominance over the more feminine creatures of Silent Hill 2 (i.e. 'raping' other monsters)
c.) An executioner of sorts; some believe he is The Red God, Xuchilbara.
-A common theory is that Pyramid Head is Jimmy Stone. Jimmy was the leader of the Valtiel sect of The Order; often he is seen wearing a red, triangular hood during ceremonies. He was called "The Red Devil" by some. This leads many to believe Pyramid Head is Jimmy Stone.