In one early scene in Carlo Collodi's Pinocchio, the titular character plays hooky to visit a puppet theater. The act is a pair of wooden marionettes, Harlequin and Punchinello, arguing onstage. However, they soon recognize him in the audience, instinctively knowing his name and calling him their brother. They, and all the puppets from behind the curtains, call him up onstage and the play breaks down as they welcome him.
The showman, Fire-Eater, plans to use Pinocchio as firewood, and then plans to use Harlequin instead. After Pinocchio talks him into relenting, the puppets dance all night. This scene is never mentioned again. The puppets here are just as alive as Pinocchio, but are treated as property rather than children, and there is nothing to stop their owner from throwing them on the fire if he's displeased.
This scene baffled me when I first read Pinocchio, because it means he is not the only one of his kind and living puppets aren't uncommon.
Maybe they were carved from similar pieces of talking wood. It fits in with the logic of the story. Ultimately, the scene contrasts the fate of a puppet with the fate of a human - and Pinocchio doesn't want to be a puppet. Pinocchio has a long hard road before he can become human. The other marionettes are content to remain what they are, but that comes at the price of freedom and security. He shows his noblest impulses of generosity and kindness while he's with them, but he doesn't have a great bond with them.
Alexei Tolstoy's retelling of Pinocchio, The Golden Key, or the Adventures of Buratino, ran wild with the idea of other puppet characters. Here, Buratino has no desire to become a real boy, and at the same time has a much greater bond with the other puppets. His quest is to liberate them from their owner.
More recently, the graphic novel Pinocchio, Vampire Slayer and the Great Puppet Theater appeared. It is exactly what it sounds like. Here again, when Pinocchio is teamed up with the other puppets and treats them like family, he is still a puppet rather than a human being.
The puppets, including Harlequin and Punchinello and Rose, are all stock figures from a form of Italian theater called commedia dell’arte. This has descendants throughout English theater traditions as well. Punchinello, Pulcinella or Punch is one of the main players of the Punch and Judy puppet show. British pantomimes of the 18th and 19th centuries often involved harlequinades, where characters transformed into the clowns Harlequin and Columbine for a dance. The multi-colored Harlequin was mute and carried a magic wand. Peter Pan almost included a harlequinade.
Harlequin comes from the Italian Arlecchino. It may also have roots in Hellequin, a name for a leader of the terrifying Wild Hunt, or the German Erlkönig (Elf King). Further back, it may derive from a mythic figure known as Herla, who in turn is related to the Norse god Woden.
The Harlequin clown design also inspired DC Comics' multi-colored villain Harley Quinn.
This website is based on my research into folklore.