Just a hilarious cartoon frog. Nothing weird about this.
This is why the dismissive replies here are inane. Pepe has been enthusiastically adopted by white supremacists, acknowledge that and move on with your life rather than burying your head in the sand. You can think it's absurd on their part, but shooting the messenger is always foolish.
Is the whole situation ridiculous? Sure, but understanding the history here is going to be important during the election postmortem when people are trying to understand how a white supremacist almost (hopefully) became the POTUS.
The internet is a huge part of mainstream life these days, which is great but simultaneously problematic in that it levels the playing field for discourse, and allows the rapid dissemination of lies which quickly become facts because they feel good to believe. As absurd as it sounds, memes are a pretty killer propaganda tool because they are basically snapshots of feelings.