The City-dwellers are an advanced pacifistic offshoot of humanity living in a hidden city a mile below Antarctica. They have conquered their emotions and, at the dawn of the new millennium, are ready to join with Transformers and humanity to teach them how to live in peace... or so they would have us believe.
In reality, the city-dwellers are cold, calculating robots. For millions of years they have hidden on Earth, studying the planets. They seek to study the warrior-factor and program it into themselves to become an unstoppable race of conquerors, beginning with Earth!
The city-dwellers appear to be tall fair-skinned humans. Though they have studied the appearance of humanity through viewing screens, they are easily given away by an insensitivity to extremes in temperature - touch being one of the things the screens could not show them.
'City-dwellers' is not the aliens' name per-se, though they are referred to as such.
The city-dwellers came to Earth millions of years ago, constructing a hidden city a mile below the Antarctic ice. Or possibly on surface level, the ice level may have risen around them. I'm not up on climate change.
In the year 2000, the city was discovered by the Federation of Western Europe while drilling for oil. Being pretty effeminate Europeans, they naturally called the Americans for help, and Cal-Tech sent over some Autobots on a plane.
The City-dwellers shot the plane down, killing most on board, and pretended the Decepticons were responsible. They planned to study the ensuing battle between the Autobots and Decepticons as the basis for their new combat-programming.
The Watcher is the leader of the city-dwellers, essentially identical to the other save for his metal collar.
The Watcher is the city-dwellers' public face, making great pomp of his role observing humanity for millennia, and their goal of non-interference. He almost certainly stole the schtick from Marvel Comics.
When last seen, The Watcher had been reprogrammed to believe he was the cartoon character Gus Gopher.