This is a reference to the D&D character Vecna, for whom this Vecna is named; the D&D Vecna has a monstrous hand infused with dark magic. The design of Vecna's hand is also a nod to Freddy Krueger, the Nightmare on Elm Street villain who had a huge influence on this season in general.
Explaining the link, one Stranger Things fan commented: "It's a reference to the lore of Vecna in Dungeons and Dragons. He uses his left hand for his powers, and in actual DnD, Vecna's left hand is cut off and becomes a powerful magic item.
Vecna was once betrayed and attacked by his lieutenant (Eleven, in this case); all that was left of him, in the end, was his hand and eye - which make up the reason the hand and eye of Vecna became powerful artifacts in D&D.
Vecna, unlike the other creatures, is a human who has mutated into a monster from overexposure to the Upside Down. He's been subjected to the toxic environment for around 20 years and has become a part of it.
What Does Vecna Want? Vecna's goal is to open as many gates to the Upside Down as he can, in order to help the Mind Flayer.
The theory predicts that Vecna wants to regain his human form, and he will use Will to do so in Season 5. Knowing that Vecna singled out Will in Season 1, it's a reasonable theory, but it might go too far. After all, Vecna already has a human form, and he has vowed to eliminate humanity.
Vecna draws power from sad and angry memories and that is the main reason he targets traumatized teens. Those teens are a well of power just there to be absorbed. This is not just a theory, Vecna himself told Eleven about the power that angry and sad memories hold.
At his empire's height, Vecna was betrayed and destroyed by his most trusted lieutenant, a vampire called Kas the Bloody-Handed, using a magical sword that Vecna himself had crafted for him, now known as the Sword of Kas.
This is because his trusted accomplice, Kas the Bloody-Handed, betrayed him and used the sword Vecna created himself to chop off his left hand and remove his left eye. This ultimately destroyed Vecna. Though they're clouded with cataracts, Vecna in Stranger Things has both of his eyes.
Unlike previous villains the Demogorgon and The Mind Flayer, Vecna is a human creation. In fact, the demonic being who would come to be given the name of a D&D necromancer was once a human himself: a little psychic psycho Henry Creel a.k.a. Number One a.k.a. “The Orderly,” as played by Jamie Campbell Bower.
Orcus, the demon prince of undeath, taught Vecna a ritual that would allow him to live on as a lich. Beyond death, he became the first and greatest of all liches.
Realizing he had tremendous psychic power, he haunted his family with visions before ultimately killing most of them. His father was framed for the murders and locked away in a mental hospital as a disturbed serial killer. Henry then found himself in the care of Brenner, who decided he wanted more kids like the boy.
On the final roll of the dice in Eddie's D&D campaign, Erica manages to roll a 20. It's a critical hit, the party finally defeat Vecna and win the campaign.
Ultimately, it is revealed in Stranger Things season 4's finale that the reason why Vecna was killing Hawkins teenagers was to create a massive gate that merges the Right Side Up with the Upside Down - and he specifically needed four bodies to do so.
The Hand and Eye of Vecna were all that remained of the arch-lich Vecna after his betrayal at the hands of his trusted vampire lieutanant, Kas the Bloody-Handed. Using a sword crafted by Vecna himself, Kas manage to cut off Vecna's left hand and left eye before in turn being destroyed.
According to Henry Creel, he was brought to Dr. Brenner when his mother caught on to his mysterious psychic powers.
Then, as he was falling through the Upside Down, One became the creature Vecna after lightning struck him in such a way that it changed his skin and made him into the monster he is now.
The final scene of Volume 1 shows a shot of Vecna, and a close up of the 001 tattoo on his arm, confirming that Henry Creel, a.k.a. Number One, became Vecna.
If the eyes and the right hand weren't enough to convince you already, it's confirmed that Vecna was once human – and he has a very strong connection to Eleven and the Hawkins Lab.
Near the end of Stranger Things Volume 1, Dustin speculated that Vecna is the Mind Flayer's “five-star general,” but the truth is nowhere near that simple. From the information we got during the Stranger Things 4 finale, we can conclude that Henry Creel is the one calling the shots; in fact, Henry is the Mind Flayer.
Vecna's first big credited kill was Chrissy Cunningham (Grace Van Dien). He followed that murder with canonically terrible driver Fred Benson (Logan Riley Bruner) and basketball star Patrick McKinney (Myles Truitt).
While Vecna from Stranger Things boasts impressive proficiency in mind control and psionic magic that makes him at a potentially world-ending threat, Vecna from Dungeons & Dragons literally ascended to godhood, cementing his place as one the most powerful magic users in existence - a multiversal threat.
After taunting her with incessant chiming from a grandfather clock and appearing before her in hallucinations, Vecna eventually kills her in an incredibly gruesome way. First, she went into a trance with her eyes rolling into her head, then she began to levitate before her eyes were removed and bones were snapped.
While intending to get his revenge on Eleven and Brenner, Vecna also goes after victims who have dealt with traumatizing experiences in the past (reminiscent of his childhood and his time at the Hawkins lab).
The episode then cuts to Vecna in 1980s Upside Down, zooming in on his arm, where a tentacle slides away to uncover 001 tattooed on his wrist. So Vecna is 001, who is also Victor Creel's son.