When you first get out of the escape pod, you will find yourself in the hermit's house. He tells you to give him a radio and if you decide to give him a radio he will give you his key that will let you open the hut's door. If you give him the radio, then kill him, your radio you've given the hermit will drop. If you kill him without giving away the radio he drops his key.
Although it's annoying how it never ceases to stalk you, it can be kept as a pet as long as you give him a radio to play with when you're away. If you give him a Pistol, he will fight along with you. He uses the Pistol like a VC Pistol, firing faster than normal (Optional).
The Hermit seems to be a deserter from a group of armed men roaming around the planet.