In Smackdown vs Raw 2006 Taker can play Smackdown's! season mode, which soon leads to him fighting JBL for Torrie Wilson's contract. Out of character right? Except that Calaway had been a legitimate Papa Wolf in this regard, for real, and it would be completely in character to be in an angle and free Torrie from the slimy clutches of the Texas tycoon, and most likely just tear up the contract afterwards.
For in-kayfabe Fridge Logic; if 'Taker is some sort of supernatural being, why in the world does he spend his time wrestling?
The same reason Dark Brain forced his worst enemies into a completely harmless dodgeball tournament, for shits and giggle.
You can also interpret his character (if you so wish) as a normal guy like the rest of the roster who uses special effects and illusions to intimidate his foes into thinking he's some mythical being in the same way Batman does.
Am I the only one who loves the thought of The Undertaker being WWE's Batman?
Considering he's done things like wrestle a match immediately after suffering 2nd degree burns from a mis-timed pyro, at least some of the mystique is real and well earned.
Some people interpret it as a sort of Who Wants to Live Forever? thing. Since Undertaker, at least in character, appears to be functionally immortal, who knows how long he's existed? Perhaps wrestling is just something he's taken up recently (as much as it can be recently to a force of nature) to amuse himself/pass the time.
A related question comes from the time when Vickie Guerrero booked Undertaker vs. Edge in a TLC match for the World Heavyweight Championship, with the stipulation that if Taker lost he would be banished from WWE forever. Undertaker had the match won on several occasions, but the continuous strategic interference of La Familia enabled Edge to overwhelm Taker and win the day. More important than that, Taker was never seen signing the contract to agree to the stipulation. Yet the Undertaker would never show up anywhere to protest this ban. Infact, the next time he reappeared was at SummerSlam, after Vickie had voluntarily rescinded the ban and booked Edge vs. Taker again, this time in a Hell in a Cell match, due to Edge's infidelity. The question is, why would the demonic grim reaper who is so frightening and fearsome that Satan answers to HIM with 'sir', accept being banned for life under circumstances which were clearly unfair and which he never signed off on to begin with, when he's got the powers to easily render said banishment meaningless?