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Note: This Trope has been subjected to some misuse. Please read this article before listing it on a work's YMMV page.
Someone who is Crazy Awesome is someone who's completely nuts, in an amusing way, and is effective at what (s)he does because of that craziness. In real life (s)he'd get fired from whatever job (s)he has/would have, or even arrested—at the very least, the things (s)he does just plain wouldn't work. But somehow, as his/her every action is generally protected by the Rule of Cool, (s)he manages to be both effective and a character that the audience likes or even loves.
What separates this character from being a plain old Cloudcuckoolander, Bunny Ears Lawyer and the like is that it is because of his/her extravagant madness that the Crazy Awesome can both function in the work and have such appeal.
For example: let's say The Chosen One's best friend, Ed Smith, wears a traffic cone on his head. Said traffic cone is spray painted metallic purple and has a grinning chimpanzee's face painted on the front. And Ed insists that you call it Sheldon. Yet despite this, Ed is very loyal to The Chosen One and can hold his own against the army of Mooks. So far, he seems like your average Bunny Ears Lawyer, right? The traffic cone is an eccentric trait if there ever was one, but it's not necessarily why he's liked by the audience. Now suppose about ten episodes into the series, the Big Bad decides to drop a bomb on the Hero's city, and only Ed can do something to stop it. If Ed were to catch the bomb in his hand then kick it back to the Big Bad's jet, thus destroying them both, he's still not Crazy Awesome, he's a Badass Bunny Ears Lawyer.
If, instead, Ed pushes an inconspicuous button on the underside of Sheldon's base, and a jack-in-the-box chicken head springs out of the top and shoots Frickin' Laser Beams out of its eyes that disintegrate both the bomb and the jet in the space of five seconds, then Ed Smith (and Sheldon) has become Crazy Awesome.
In other words, it is because of Ed's quirkiness that he is an effective cast member. He would not be as effective (or, indeed, the same character) without the eccentricities. There can't be one without the other.
On average, every other action the Crazy Awesome does is cool, awesome, and/or funny, over-the-top, or a combination thereof. The Heroic Comedic Sociopath is Axe Crazy Awesome. A Large Ham is a verbal Crazy Awesome. As previously mentioned, a character that can "work" without the quirks (but still wouldn't be the same) is a Bunny Ears Lawyer. If (s)he's just crazy, (s)he's a Cloudcuckoolander. If his/her crazy awesomeness prevents from being killed or arrested, when everyone else is, (s)he's just benefitted from a Lunatic Loophole. May be a Lethal Joke Character. Expect lots of Insane Troll Logic to be behind their plans and antics. Compare Power Born of Madness, Eccentric Mentor and The Wonka.
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