Ruby could be anyone. It might be a name given to a character in a specific story or just a name of a person in real life who likes to read stories in her own time.
Well, her sister Yang would definitely be one of the main characters. Yang would be very protective of Ruby and would try to help her in any way she could. Weiss would also be important. She might use her intelligence and Dust - related skills to assist Ruby. And Blake, with her stealth and combat skills, could be crucial in protecting Ruby and guiding her through difficult situations.
I don't know exactly who Ruby is without reading the story. But she is likely the main character, a person who has some kind of story related to reading in the street during her own time.
The relationship between Max and Ruby makes it special. Ruby's caring yet sometimes bossy nature towards Max creates an interesting dynamic. It's a story that many siblings can relate to.
Well, in 'Max and Ruby Ruby's Bedtime Story', Ruby usually tries to get Max ready for bed. Ruby is often very proper and has her own ideas about how things should be done. Max, on the other hand, might be a bit more mischievous. It's a cute story where Ruby reads a story to Max, or they might have a little chat before going to sleep. There could be some gentle lessons about bedtime routines in it too.
One interesting thing could be the characters she creates. Since Ruby is creative, she might come up with some really unique characters for her story. They could be animals with special powers or little people with big dreams.
A great fanfiction plot could be that Faunus Ruby is being discriminated against by some students at Beacon. Weiss, who is used to a world of privilege, decides to stand up for Ruby. This act of kindness makes Ruby trust Weiss more. As time passes, they find themselves relying on each other more and more during combat and in their studies, and a beautiful friendship (or maybe something more) starts to develop.