She is an official character of My Little Pony; Friendship is Magic. There was a bug in the animation, causing her eyes to screw up. The fans noticed and lovingly adopted the name "Derpy." Then when her name becomes mentioned in the show as "Derpy Hooves," a small handful of people complain, saying that "Derpy" is offensive to mentally handicapped people. The suggested solution was to eliminate her from the show entirely. The fans that supported her made a big fuss, and a compromise was made. They omitted her name from the show (though you can still find the original unedited episode online) but kept her as a background pony. Then, to avoid further fuss about the name being insulting, they renamed her "Ditsy Doo." But many fans (including me) insist on calling her Derpy.