Brute-Bots are robots specifically designed for punching things, and nothing else. They have no morality or sense of right and wrong, they just punch all day and all night (unless powered off).
Pugno's parts were stolen from the Brute-Bot building factory by a scientist named Mirabilis. His original intention was to create the strongest Brute-Bot, by remaking his arms using the strongest metals around. Problem was, all of the metal was rusted, so he had to make do with that. After constructing the body, he was ready to zap Pugno into life, but he used the wrong electricity to do so.
Pugno was brought into life, but he didn't immediately start punching. Instead, he began to ask questions ("Why am I here?"). Scared that he might be found out, Mirabilis grew Pugno up in private, keeping him well away from any other contact. When the time was right, he gave Pugno away to the Brute-Bot factory, telling him to "act like them".
Pugno analysed his brethren's behaviour and conformed. Everything went smoothly up until he saw the manager of the factory, Princeps, kicking another Brute-Bot for being defective (i.e. not punching). Enraged, he punched Princeps through three walls, killing him.
He was ousted from the factory and banished to Aridfire Desert, where he was discovered by Aurum and Argentum, still under the notion that he was a Brute-Bot. The three of them carried onwards, Pugno becoming friends with Argentum after realising he didn't have to not be himself around them. He thought Aurum was "OK", but let all of that go once he witnessed the death of Flumen.
After Aurum's defeat and after Heliora sent both him and Argentum back, he returned to Mirabilis' house, where his newfound powers came in handy.
Pugno has his punch, obviously, and the strongest recorded of all Brute-Bots. He also has the ability to shoot steam from his body, and after his defeat of the Sandstorm Guardian, he gained the power to breathe fire and whip up sandstorms. According to Mirabilis, "he makes the best boltbacon I've ever tasted, isn't it lucky he wound up with that scum of the earth, Aurum?"