The Yellow Sage is The Sage of Yellow Eco. He was captured by Gol and Maia Acheron to power their Precursor Robot that they were going to use to take over the world and open the Dark Eco Silos. However, with the help of Jak and Daxter, he was released, and was able to provide his power of Eco manipulation to create White Eco, the object that defeated Gol and Maia in the end, and that could have transformed Daxter back into his human-self.
Despite his lab being right next to Gol and Maia's Citadel, it was never actually seen. All that is found there is a Warp Gate, but nothing else. It is directly outside of the Citadel, found inside of the Lava Tube, where Yellow Eco seems to be abundant, making this an ideal place to study and work with the magical Eco.