I belive this is the word you're looking for: http://tvtropes.org/pmwiki/pmwiki.php/Main/Flanderization
Only instead of a character, it's the entire world.
Yeah, i guess it's the best way to describe that. Sometime, i would need to improve my english more than what it is now in order to help me to explain thing more like the way i would want to.
But yeah, i could give you one good exemple in the Mario universe of something that went wrong: Super Mario Bros 2. This game is very different from the other Mario game: No fire flower or item box, no goomba or any familiar ennemy, etc. In fact, when you look at the development of this game, we can realize that Mario 2 is in fact not a Mario game at all, but rather a japanese game released for the Famicom Disk System under the name of Doki Doki Panic. Then, Nintendo take this game and slap the name Mario on it and BAM, it's a Mario game.....execpt, not really. The fact that this game is good or not is not really what's make Mario 2 so divided by the fanbase, it's because it doesn't feel like a Mario game. Sure, Mario is here, Luigi too and other character. But the universe itself is nothing like Mario, it feel like a totally different world!
Sonic is more or less the same as Mario 2: the original game have a world established (according to some source, the world name is Mobius), then, all the colorfull and cartoony world of Sonic is now full of real world American city or something. In this case, is no longer about just being in a different place within the same world, but being in a different universe alltogether. In comparaison, if you go to a trip in a different country, you may expect to see a different culture, architecture, and maybe society. It's logic to find some difference between your country and the others. But if you go to a another country to find a green sky, people with 3 eyes and squid face, flying dogs and cats, entirelly different form of technologie, etc, it's more likely that you're no longer in the same world. The Sonic franchise is like that, it start off with a good start point, perfect to expend. But then, you are in something that doesn't look the same at all. Like the picture i showed earlier, a Mobius Island and a New York city style don't fit within the same universe. This is why it's hard to find out what is really the world of Sonic. It's because it KEEP CHANGING!
Unfortunatly, the same keep hapening to the character as well. Take Amy for exemple, at first, she was a fan of Sonic. Now, she's obsess about Sonic like a freaking maniac! Or Knuckles, who was the guardian of the Master Emerald. Now, he's......heu...well....he's...there. Beside some portable spin-off, like the Advance serie or Sonic Chronicles, we haven't seen the master emerald for awhile! In fact, i don't think that we will ever see the Master Emerald anymore up to this point! I can understand that sometime, the developing team didn't find any reason to bring back some character, so they change him for story purpose, but in the case of Knuckles, they did nothing to him.
What i mean is, if the Sonic Team don't find any good reason to add the Master Emerald to the story, then why bring Knuckles? After all, the Knuckles duty is to watch this damn rock. So without the Master Emerald in the story, we don't need Knuckles. But they don't want to let Knuckles died like Mighty or Nack, so they have to give him new purpose, in order to have an excuse to bring him back in every new game. But they didn't, so Knuckles is just here for the sake of being here!
This cause more problem, like they killed the purpose of their own character. Character like Amy or Knuckles don't even behave or act the way they used to. Some fan may liked them for who they were. But if you change the character personnality, you killed what's make them interesting. But Sega doesn't stop there, they created more character instead of developing more those who was created before. Having alot of character is not the main problem. It's more of how you write them and Sega does it very poorly.