He is a hero for his nobility of purpose rather than for his prowess in battle. Momotaro combines the two virtues. He came into being in a peach. A childless couple found the peach floating down a mountain stream and when they took it home and opened it, there was a perfectly formed minute human boy. They named him Momotaro, which means peach child, but it has been translated as Little Peachlings. The couple regarded him as their own, and he grew up to be both dutiful and brave. The people of the area were being terrorised by a number of oni which inhabited an island and were making raids on the mainland to steal its treasures.
At the age of fifteen he decided to act. Before setting off on his mission, his mother gave him some rice cakes. On the way he met a dog, a pheasant and a monkey in that order. They were all able to converse with and with each other, and in turn they joined him on his expedition, in each case in return for a rice cake. When the group reached the coast, they found a boat and had an uneventful voyage to the island of the oni.
With his friends he attacked the oni castle and killed all of the beings. They then released all of prisoners and filled their boat with the treasurs stolen by the oni. They returned as well as was all of the treasure. There was enough left over for Momotaro's parents to live in comfort for the rest of their lives.
Source: Japanese Mythology, written by: Juliet Piggott.
Relevance to Urusei Yatsura
His is probably one of the most famous fairy tales in all of Japan, so UY takes plenty of jabs at it. While never a main character, the story of Momotaro is referenced a lot in Urusei Yatsura. There must be at least a dozen TV episodes that focus partially on Momotaro or his story (so much so, that I kind of wished they'd stop running the joke into the ground). Like the heian period episode where the cast runs into a wimpy looking Momotaro hunting Oni, or when Ten first arrives on earth in a giant peach, or a much later story where the cast finds a giant peach floating in the river that contains Cherry.