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Lodz is the carnival's blind mentalist, whose abilities include: divining past, present and future from an object, reading people's dreams, and telepathic communication. Lodz apparently has no compunctions betraying colleagues, as evidenced by his brief alliance with Management after the carnival changes hands. It is strongly implied that Management is using Lodz to locate Scudder, although this seems to stop after the events that transpire in St. Louis.
Afterwards, Lodz returns to his position as the mentalist, and latches on to Ben as he can presumably see the young man's true nature. He attempts to instruct Ben, but the young man rebuffs all Lodz's advances. It is not until Management manipulates Lodz into killing Ruthie (a service which Management rewards by restoring Lodz's eyesight) that Ben is forced to act. Lodz's death will inevitably raise complications, most notably with his pseudo girlfriend, Lila.
Lodz's body is hidden by Samson and Ben, at Management's behest. Samson is forced to deny all knowledge of Lodz's whereabouts to the other carnies and perpetuate the lie that Lodz disappeared during the night. Most of the carnies don't care, and others are glad to see him gone, but Lila manages to stage a brief and unsuccessful revolt by incriminating Samson in Lodz's disappearance. The scheme fails and Lila winds up worse off than before.
As for Lodz, he makes several appearances throughout the season. He usually appears as a brief shadow, but sometimes he makes a more physical appearance. He also is now able to possess Ruthie's body for brief periods of time in order to interact with the physical world. These "interactions" include going down on Lila and writing "Sofie is the Omega" in lipstick on Ruthie's mirror. However, nothing seems to come of any of this either.
Post-Season 2 Backstory
In an attempt to escape his avataric destiny, Scudder attempted to transfer his powers to Lodz. The exchange didn't work, and Lodz wound up blind with moderate telepathic abilities, as well as a psychic connection to Scudder. Scudder remained unchanged.
The incident in St. Louis was Lodz trying to cut a deal with Scudder, and Management finding out.