Terminology: Yuru Chara vs. Gotouchi Chara vs. Plain Old Chara(cter)
You may see all three terms used to refer to various mascots and characters in Japan such as Funassyi. So what's the difference?
A chara (pronounced kyara), a truncated version of character or mascot character, means any kind of mascot-type creation. It is usually used to refer to mascots and the like that have been created mainly for the purpose of marketing licensed merchandise, or as a symbolic representative of a group or corporation. Regular chara are usually professionally designed and managed. Internationally known chara include Hello Kitty, Rilakkuma, and Mameshiba. (Mameshiba is a quintessential professional commercial chara; it was created by Dentsu, the largest ad agency in Japan, expressly for the purpose of licensing.) Something like Domokun, the official chara for the national broadcaster NHK, is also a chara. Chara abound in Japan - every entity from corporations to universities to and more seem to have their own chara.
There are also chara with successful licensed merchandise and so forth that originate from manga or anime. Pokemon, Doraemon, Snoopy, Miffy, Gundam, the One Piece crew etc. belong to this category.
The term yuru-chara (ゆるチャラ) is most often translated as "loose character", but "loose" does not mean it is morally ambiguous or that its costume is loose-fitting. The "yuru" part can mean loosely defined or amateurish, easy-going, relaxed and so forth.
Although local mascots have existed since the 1980s or so, the specific term yuru chara was created by manga artist, illustrator and essayist Jun Miura in 2000. Miura later set out the 3 requirements for a yuru chara as follows:
It must convey a strong message of love for its local region.
its appearance and demeanor must be rather unstable/amateurish (not very professional) and unique.
It has a lovable looseness/easy-going/unfinished (i.e. "yuru") quality.
The term gotouchi chara (ご当地キャラ)simply means local/regional character or mascot. In principle it is synonymous with yuru chara. However, since Jun Miura registered the term yuru chara as a registered trademark and established a licensing company called Yuru Chara K.K., some local characters and their representatives, especially commercially successful ones, have been careful to use gotouchi chara instead, possibly to avoid any legal problems. The national association of local mascots is called the Gotouchi Kyoukai. (In an interview that aired on NHK in November 2014, Funassyi carefully corrected the interviewer when she called him a yuru chara and said "Funassyi is a gotouchi chara nasshii". )
Whether you call them gotouchi or yuru, there are thousands of local chara roaming around Japan these days. You have probably never heard of most of them - and neither have most Japanese people. In a survey taken in mid-2014, Kumamon and Funassyi were recognized by more than 80 percent of the people surveyed, with a big drop thereafter in recognition for everybody else.
Most local chara are official - that is, they are sponsored and supported by a local government/municipal group, or in some cased a corporation with strong regional ties. Examples of well known official local chara besides Kumamon include Hikonyan (Hikone Castle in Hikone City, Shiga prefecture), Sento-kun (the ancent capital city of Nara, Nara prefecture), Gunma-chan (Gunma prefecture), and Barysan (Imaji City in Ehime prefecture).
There are many unofficial local chara too, especially in the wake of Funassyi's astonishing success. Besides Funassyi, other well known unofficial (or in some cases, at least not publicly official) chara include Chicchai Ossan or Little Middle Aged Man (Amagasaki City, Hyogo prefecture), Okazaemon (Okazaki City, Aichi prefecture) and Nebaaru-kun (Ibaraki prefecture).