xoxo MoMo-MoNkEy xoxo
Hogwarts is the place I reside,
The hero finds me delving into his inside.
Of course, the Sorting Hat was in Hogwarts ever since the four founders gave it their knowledge. It is inside of the hero (meaning maybe Harry) when he was being sorted to a house, reading his thoughts, knowledge, traits, personalities and mental state.
xoxo MoMo-MoNkEy xoxo
Rags and tatters am I hidden behind,
But once I am used a hidden talent you shall find.
The Sorting Hat looked like a century-old hat (which it could be) and was all rags and tattered at places, hidden in the Headmaster's Office. But once it was used, it will point out the person's traits, talents, purpose, and possible future, along with placing the person in the house he was meant or purposed to.
xoxo MoMo-MoNkEy xoxo
Though I am not there in the very end,
My help to the wizard world has been simple but...important.
Well, in the books, the Sorting Hat wasn't much mentioned in the end of them, even in the death of Voldy, but his help to the wizard was by placing them in the house they're suited for, thus, placing them in their path to life.
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Ugh, I think that's about right.