Cliff is the observer. He's the writer (narrator per se), writing about others. I don't have a problem with that device or character or lack of singing.
I agree about characters needing arcs - but not every character has to take that on. It can easily dilute a book having too much going on. Some characters (like in films) are there for a plot device or to provide information or comic relief or whatnot. Some shows do it very successfully.
Is there really an arc with the two gangsters in Kiss Me Kate? No. Are they interesting/needed/etc - I think yes.
Perhaps it's because of the material they are given...
"A little nonsense now and then is relished by the wisest men" - Willy Wonka