His crown makes you large as Zeus.
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You get the Crown from Hades after Zeus takes the sacred items. Together with the Trident from Poseidon, it lets you battle Zeus on Mount Olympus. (It forms the pink clouds that keep you flying.) After Zeus takes the sacred items, Hercules will help you reach the throne rooms of Hades and Poseidon. You will need the Touchscreen Mirror from Aphrodite's test on the beach in Poseidon's realm.
The Hades Crown lets you fly against Zeus in your battle on Mount Olympus. You should collect the small pink clouds as you move because these will give you added "health" to keep flying when you are hit. Pressing the spacebar was apparently designed as a shield of sorts, but it is not very functional in the battle. (After you complete the battle, wearing the Crown and pressing the spacebar makes you grow into a giant, but this has no effect on game play.)
In Greek mythology, Hades, the god of the underworld, was often depicted wearing black or dark-colored robes. Some descriptions also mention him wearing a crown or a helmet to symbolize his position as ruler of the underworld.
Zeus, Poseidon and Hades divided the world between them, and this is what Hades got.
Hades the god was in charge of hades the underworld.