There are all kinds of creatures in Dragon Ball Z but what, exactly, is Chiaotzu? Broadly speaking, the characters of the Dragon Ball franchise can be slotted into several categories. There are humans such as Krillin, Yamcha and Tien, Saiyans like Goku and Vegeta and aliens from other planets - Piccolo and Frieza for example. Above those lowly life forms, Dragon Ball has cracked open the world of Gods, with a whole hierarchy of Kais and angels up in the sky. Dragon Ball's Earth is also home to an array of fantastical beasts, with dinosaurs apparently defying extinction and the likes of Pwar and Oolong capable of using speech and magic.
Chiaotzu, however, doesn't neatly fit into any of the above. Introduced in the original Dragon Ball series alongside Tien as a student of the Crane school of martial arts, Chiaotzu has been a mainstay of the story ever since, although the diminutive character has, along with almost every other supporting figure, taken a backseat in more recent years. Both in terms of his visual style and his actions, Chiaotzu stands out from the other Z-Fighters. The small warrior has a pale face with permanently red rosy cheeks, a child-like high pitched voice, and is one of the few Dragon Ball characters to have not demonstrably aged throughout the series, at least without an explanation being offered. As well as a design similar to that of a doll, Chiaotzu also fights strangely, using magic techniques seen nowhere else in the Dragon Ball world. Curiously, Chiaotzu was levitating long before flying became the preferred mode of transport for Goku and his pals.
Despite his strange uniqueness, Chiaotzu is confirmed to be a human from Earth, just like his partner Tien. The reason for Chiaotzu's appearance is not his heritage, but the influence of Chinese fiction on Dragon Ball creator, Akira Toriyama. The franchise itself is based on the Chinese story Journey To The West and Chiaotzu continues Toriyama's Chinese inspiration, since the character's look is based on a Chinese vampire called a Jiangshi. Somewhere between a vampire and a zombie, a Jiangshi is a reanimated corpse dressed in ancient, formal attire and derives from the Qing dynasty of the 18th century. Much like Chiaotzu, the Jiangshi is known for advancing on its opponents by hopping towards them with rigid, outstretched arms and is defined by a pale complexion and traditional round Chinese hat.
This accounts for Chiaotzu's unusual appearance, his dress sense and his unique way of getting around, while also providing a potential explanation as to why the character doesn't appear to age. While a vampire-like character may seem odd among the Saiyans and aliens of modern Dragon Ball, this was actually typical of the franchise's early years. The initial run of Dragon Ball arcs included werewolves, western-style vampires, a Frankenstein-like creation, and several other characters inspired by horror culture. While most of these would've been obvious to audiences in both Asia and the West, the Jiangshi is largely unfamiliar to international viewers, especially in the U.S. where vampires look more like Robert Pattinson or Tom Cruise.
It's important to consider that when Dragon Ball was at its peak in the 1980s and 1990s, Jiangshi movies were experiencing a period of immense popularity in Asia and, despite being a cartoonish depiction of the trope, Chiaotzu would've played into this trend and been immediately recognizable to many Japanese fans of that era. As Dragon Ball's following expanded worldwide, however, Chiaotzu's origins were lost on a wider audience, and this may be partly why the character faded into the background as Dragon Ball Z progressed.