Phantom Freddy is one of the six secondary antagonists in Five Nights at Freddy's 3. He is a hallucination or possible ghost of a burnt and damaged Freddy, created by Springtrap to impede the player's progress.
Freddy, along with the other animatronics, Toy or otherwise, appear to have been scrapped or otherwise lost completely in the thirty-year gap between games.
In one of the trailer photos, what looks like a broken down, unfinished Freddy can be seen as just a torso and head. However, Freddy does actually return, not in the Freddy torso and head, but as an antagonistic phantom or spirit that still stalks the player. Since Freddy is a spirit, he is unable to kill the player, despite his ability to jumpscare the player.
He attacks the player throughout the nights along with his fellow spirits but without any luck killing him. However, as the nights go by he gains enough power to disable all three systems.
In the cutscene after Night 1, Freddy is playable, and the Killer dismantles him and later his friends. After Night 5, the final cutscene is shown in which golden Freddy and the other spirits, now children again, corner their murderer until he enters Springtrap, unwittingly killing himself. Seemingly satisfied, all spirits leave.
After Night 6, the horror attraction burns down, presumably destroying Springtrap and releasing the souls of golden Freddy and the others (as children) for good, thus ending the horrors at Freddy's once and for all.
Phantom Freddy is essentially the same model as Freddy Fazbear from the second game, but he lacks eyes and instead has pin-pricked, white irises, and is missing his right leg which is cut off at the knee. He also appears to be charred or burnt, possibly foreshadowing the fire that breaks out in the establishment.
He also shares some similarities with Golden Freddy's model from Five Nights at Freddy's 2, namely, his missing left ear and wires coming out of his right eye socket. Interestingly, he appears to be colored golden, or at least green, though this may simply be from his burnt appearance, as the other phantom animatronics share the same properties of his color scheme.
Phantom Freddy will usually appear in the hallway, right in front of the player, slowly shuffling to the left, before ducking down, as if hiding. He then appears next to the box in the office, jumpscaring the player.
Phantom Freddy's silhouette will randomly appear to walk across the window in front of the player. The player must be viewing either the Monitor or the Maintenance Panel until Phantom Freddy finishes walking across the length of the window to avoid triggering his jumpscare. If the player fails to do this while Phantom Freddy is wandering, he will duck down, completely removing himself from the player's sight. He will then jumpscare the player a few moments later, disabling the audio, sound, or ventilation. In later nights, he is powerful enough to disable all three, and can be considered the most dangerous phantom because of this ability and his recurring appearances.