The Woodsman along with other people from The Unknown seen throughout the episodes warned both Wirt and Greg about The Beast's presence in the forest. In the present, when Wirt and Greg came to The Unknown, The Beast knew that he found his next targets to turn into Edelwoods and maintain lit his lantern. For many years The Woodsman has chopped the wood and collected the oil from it, not knowing of how the trees were created. The lantern is kept lit by the oil from Edelwood, a type of tree that forms when The Beast captures the souls of children led astray. It is assumed that The Beast stole the soul of Anna. He deceived The Woodsman into believing that his daughter's soul was sealed inside the lantern, and that she would keep on living as long as the flame was lit.
It is unknown when The Beast lost this lantern to The Woodsman, but The Beast has haunted the man ever since. The Beast had bore an old lantern called the Dark Lantern, containing his soul in its flame. Most likely, The Beast was manifested from despair over history, thus he always tries to cause despair to people of The Unknown in order to maintain his sentience.
Aside from all of the dangerous creatures and beings that already lived in The Unknown, The Beast was the most feared and dangerous. The Beast's past and origin is unknown and uncertain, but it is most likely that he just appeared and tormented the inhabitants of The Unknown, and had the power to possess everyone there to accomplish his plans, this even included animals as he took control over Beatrice's dog in the first episode.