Yamada is a fellow classmate of Wataru that he meets on the ferry boat ride to Promised Island. He quickly becomes friends with Wataru, so as to hopefully get himself a girlfriend. Any opportunity he has to impress or help Wataru's sisters he uses to his advantage, as he'll do anything to get their attention.
Although a bit of an odd character, he definitely provides the comic relief factor to the series. One of his hobbies includes Garban (a parody on Gundam) with collecting model kits and watching the TV series when he's not trying to hit on Wataru's sisters. He only appears in Season 1 of the series with the exception of a brief cameo in Sister Princess RePure.
Yamada is the third ferry passenger who goes with Wataru and Mami to Promised Island so he would enroll at the school there.
Like Mami, he also provides comic relief to the show, acting as an odd-ball casanova and makes friends with Wataru so he can have a girlfriend. This is especially evident when he calls Wataru lucky for having very pretty sisters and dreams of spending his time with them. To this purpose, he would do anything to get their attention. Despite his odd behaviour, Yamada does have some redeeming traits; he can work very hard if he is properly motivated and refrains from doing anything truly scandalous.
It is worth noting that although none of the sisters shows any romantic interest in Yamada, they do seem to place a considerable amount of trust in him, probably because he is vocal about being friends with Wataru. Karen enlists his aid as a sympathetic ear for Wataru on one occasion, and Shirayuki listens to him when he says Wataru needs "nutrition for the heart", meaning she should make him much more food because it makes him feel manly (Yamada only said this because he wanted some of Shirayuki's cooking for himself and thought he could eat whatever Wataru can't).
When he is not spending his time with the sisters, Taro focuses his attention to anything related to a fictional anime called Garban (a parody of Gundam). Some of the episodes actually end with him watching Garban; these often involve either Yamada or one of the characters to make a comment that mimicks Wataru's own situation. Eventually, he manages to outgrow this obsession, when he is provided with a surplus of Garban material. His fascination with the fairer sex remains as strong as ever, though.