Best Villain... I don't think there is a BEST villain, there are only favorites
some of my Favorites are:
Amon the fallen Xel'Naga (Starcraft Series)
Amon is a god-like being... that has fallen to the dark side.
The Xel'Naga created the Protoss and the Primal Zerg and everything went happy-go-lucky in the Galaxy... until Amon decided that everything was too happy... so he created the Overmind and twisted the Primal Zerg into his private Army... the Zerg Swarm under the command of the Overmind to destroy every living being.
However... the Overmind became self-sentient but laid low so that it's great master doesn't suspect a thing... after the Battle of New Gettisburg the Overmind ordered his swarm to bring him the last Woman standing of that Battle - Sarah Kerrigan - to make her into his own secret-sleeper-agent - the Queen of Blades.
Kerrigan should command the Swarm once the Overmind falls... to lead the swarm against Amon himself.
However Kerrigans mind was influenced by Amon, due to the Overminds connection to him, and Amon got glimpses of the Overminds plan through Kerrigan, and began to create even more vicious creatures... the Protoss-Zerg Hybrids... unstoppable beings, with the Hive-Mind and ruthlessness and adaptability of the Zerg and the Psionic Powers and intelligence of the Protoss - just in case Kerrigan really went rogue on him.
Which would later happen when Kerrigan got de-zergified by the efforts of Jim Raynor and an old Xel'Naga-Artifact. De-Zerged Kerrigan lost her connection to Amon and later learned to stop Amon she would need to return to being the Queen of Blades to command the Zerg Swarm against Amon.
In Short: Amon is an evil god-like bastard, who is out on destroying every living being in the universe. And plying all mortal races against each other, while staying in the Shadows... waiting for his time to strike personally.
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Mario, Princess Peach and the Toads!
I hear you furiously asking: "WHAT? Mario and Peach are the good guys!" (except Shadow Peach in TYD and Mario in Wario Land... but that's not what I meant... They are the BAD GUYS IN EVERY GAME!
For those of you who don't know the theories / full story... let me explain:
It all starts with the original Super Mario Bros. - The Mushroom Kingdom is attacked by the "evil" Koopa Kingdom and Princes Peach TOADSTOOL is kidnapped, and Toads are transformed into Blocks by Magi-Koopas/Kamek.
Mario sets out to rescue Peach... and the first enemy he encounters is not a Koopa but a GOOMBA! Which is a Mushroom! THE ORIGINAL Inhabitant of the Mushroom Kingdom, who fights the Toads and Peach Toadstool with the help of Bowser to reclaim their homeland!
Yes! That's right! Goombas are the rightful owner of the Mushroom Kingdom and they seeked help from Bowser and his Koopa Kingdom to get rid of the intruders aka Peach and the Toads!
Peach Toadstool is the root of all evil... SHE spreads the toads... the Toads are nothing more but a viral infectious mushroom that spreads violently!
To stop them from spreading all of the wolrd, Bowser decided to put a halt to them, by snatching their root (Peach) and transforming most of the Toads into blocks!
The Toads ask Mario for help... the ONLY human in the whole Kingdom... because the evil Animal-beings kidnapped their Human-looking-Mushroom Queen... and Mario is just a puppet in the hands of the Toads... and since Toads easily spread they don't care about him breaking/killing their transformed bretheren.
The 2D (2 1/2D) games all follow the same premise with peach getting captured... because Bowser wants to give the Mushroom Kingdom back to their rightful owners, the Goombas!
But it's always the Toads that enlist Mario (and occasionly Luigi) to help them get Peach back... and in the Wii and WiiU games even some Toads accompany them to make sure they get their Evil Queen back!
(also Mario totally ruins Bowsers vacation on Isla Delfino during Sunshine... Bowser was just taking a hot bath and Mario sends him down the vulcano... when Bowser Jr. was the one causing trouble... talk about being a huge jerk)