Rage is a new mechanic implemented in Super Smash Bros. for Nintendo 3DS and Wii U, where a character's attacks will deal increased knockback the higher is their damage percentage. It functions similar to Lucario's Aura mechanic, however it doesn't affect damage, only knockback, and the effect is much less powerful and not as noticeable.
Effects of Rage
The Rage will take effect when the character is around 35% damage, and the knockback power caps at 150% damage. When Rage is maxed, all attacks will have a knockback power of approximately 1.15x of their normal power.
Players can see the visual effect of Rage when their characters start flashing red and emitting steam, when reaching around 100% damage. After that, the higher the percentage, the more intense the effect becomes visually, until reaching around 150%. This visual effect makes characters appear to be enraged, thus the nickname "Rage" was dubbed by the Smash community. On the other hand, the Rage effect also serves as a visual indicator that the character is at his/her limit, being more susceptible to be KO'ed.
Pros and Cons of Rage
Rage allows characters at higher percentages to increase their fighting chances at a critical stage where they can be easily KO'ed. However, this increased knockback also means some combos will not be effective as before, meaning the player must take this in consideration. This is specially noted when using setups that involves throws for follow ups; the higher knockback means it will be more difficult to connect a subsequent attack after the throw than it would if the character was at "normal condition". So, in the end, the player must calculate how much knockback he/she will deal when in Rage state, and how he/she can connect attacks against low or high percentage opponents.
In general, characters with low combo potential (or that don't depend on combos much), mostly heavy weights (such as Bowser and Ganondorf), will benefit from Rage better than other characters, as their already high power combined with increased survivability allows them reach higher percentages without being KO'ed early, thus taking the benefits of rage at maximum. Charizard can exploit this rather well with his Flare Blitz attack, but not without the regular consequences, such as how Flare Blitz can fall victim to Stale-Move Negation, the launching and how the player can be labeled as a Spammer.