He is the lord of the Savage Garden and torments the Ascended Immortals. They trapped him so that he could do them no more harm.
When attempting to enter the Flooded Grotto, Kathutet will offer the choice to either face him in combat, or to help free Anaxes from his imprisonment. Doing either will allow entry.
To free Anaxes, the Hero needs to travel to the cave he is trapped in. The Ascended will explain Kathutet killed them for sport, knowing they would come back. They were all killed several times, and decided that trapping him would be their only chance.
They enclosed him in a small room in the back of the cave. The doorway is blocked with a large stone and logs keeping it secure. Removing the logs will remove the leverage and allow Anaxes to push the boulder free. Once out, he will kill the Ascended in the cave.