Yoyo and Doc Croc actually ARE the Brothers Grimm, Jacob and Wilhelm reincarnated into plushie bodies and brought to life by magic
The reason they enter the fairy tales is that their own characters got so strong they have to police them for happy endings. Basically, Yoyo and Doc Croc are fairy tale cops as well as the Brothers Grimm.
Yoyo is a kobold
The wolf kind of kobold, not the lizard one.
Doc Croc is a wizard, albeit not powerful one
He seems to know magic very well and is able to use magic in Rapunzel episode.