Since the author of the books made it no secret that he was making his own Lord of the Rings story, Allanon is obviously based on Gandalf. I hear the show version is quite a bit different from the books. He's certainly more youthful and muscular than Gandalf in either version of Lord of the Rings. Like the book series, Allanon had been present to see almost everything important to the story.
He finds Wil Ohmsford and tells him that he is a magical last "son" of some Elvish kings though Wil is mostly human in genetics.
He also guides Amberle to save the Ellcrys tree which meant becoming its new soul.
Allanon is officially the one who slayed the Dagda Mor, who was the big bad guy of the first season.
But he doesn't' have much time to rest, as the even more fearsome Warlock Lord is set to rise again. He also meets his daughter Mareth, whom he had no idea existed. While they fight all kinds of bad guys, she asks to be trained for being a magical user.
But we find out he's dying and there's not much time. He does what he can, given the circumstances he's forced to deal with.
Though he doesn't perish from natural causes, he sacrifices himself in the battle against the Warlock Lord to save his daughter.