The most unsettling villain may be the one who does nothing at all.
Not that the villain takes no action, but that the villain takes no DIRECT action. They are always scheming in the shadows, creating plans out of sight, but they themselves lift not a single finger. The hero can see the destruction and despair caused by these schemes every day, and the hero KNOWS that the villain is behind it all from the very beginning. And yet, the villain merely sits there, smiling, in plain sight, at surface level seeming to have absolutely no connection to the evil.
The most important point in the portrayal of this villain is the climax. It is natural for so many villains that when their plans are crashing around them, or when they feel they are in a strategically superior position, that they will take matters into their own hands, and while in doing so show their true and terrifying power, they also open themselves up to their own demise because they are becoming directly involved with the threat. This “unsettling” villain, however, will not do this, no matter what happens. They will continue to play a passive game, a waiting game, to the very end. Perhaps they will allow themselves to get captured, because they have plans in motion which will allow themselves to later be freed, or because their plans do not require them to be free. Perhaps they will allow themselves to be wounded, because their physical body is meaningless compared to the elaborate web they are weaving. Perhaps they will allow their fortress to be destroyed and their plans to fail, because as long as they are alive they may build a new fortress, a new plan. And in doing this, in doing nothing, they begin to toy with the head of the hero, as the hero wonders if their foe is even human. Humans strike back when struck, humans look to their own survival, humans relish gaining power with their own two hands and showing others that they have it.
But the most powerful creature is a creature who never has to show its power. All know that this creature is the greatest of creatures; they fear its wrath, and thus do not attempt to challenge it. It is not the power which is important, but the knowledge that the power exists, and might be pointed in any direction at a moment’s notice. It is not the power, but the threat of power. THIS is why the passive villain is so frightening. Not because they do nothing, but because they are so good at what they do that they can do nothing and still win. It is a feeling of utter helplessness bestowed upon the hero, as it fights against an unseen foe, almost a force of nature, because despite knowing that the villain is the nexus of the conflict, his subconscious mind cannot interpret it that way. His mind must be able to connect the dots, and associate the villain with the crime, so as to place blame and deliver justice. But the crimes are committed by proxy, by no one and by everyone, and here is the villain, minding their own business, accountable to no law, seemingly innocent. And perhaps the hero may even start to question whether the villain is even truly the villain, or if all these crimes are happenstance. And at that point, the villain has won. The fight is over, because the hero has ceased to believe in it.
“The finest trick of the devil is to persuade you that he does not exist.”