Puck's Spell of Transformation
When Demona summoned Puck through Titania's Mirror, one of her first wishes was that she no longer wanted to turn to stone, as she felt she was too vulnerable during the day. Puck then proceeded to merrily confuse Demona's additional wishes of ridding Manhattan of Elisa Maza (and the rest of humanity) by transforming them into gargoyles. While the spell was in effect, anyone entering or leaving the island would transform or revert back, none the wiser.  After being released from Demona's clutches by Goliath, Puck decided to grant Demona her initial wish as a thank you gift for all the fun he had.
Now, Demona becomes a human during the day and a gargoyle by night. The transformation occurs every sunrise and sunset. The process is extremely painful, except on the occasion of Demona's first transformation into a human after Puck cast the spell, in which case there was no pain because Puck wanted to surprise her.  Demona is 100% human by day, and 100% gargoyle by night. ("The Mirror") 
Occasionally, the spell may glitch if Demona gets angry enough by day, and her eyes will glow red. ("High Noon")
To Change Elisa Into a Gargoyle
Thy sight Demona doth offend, so Puck will hasten to amend. Begone Elisa, human born, and be no more as you were formed!
To Change the New Yorkers Into Gargoyles
All humans on this concrete isle, Demona finds your presence vile; So do you now as I command, and be not woman, child, nor man!
To Change Everyone Back
First the humans I'll attend, And now the gargoyles will I mend. If his efforts you commend, Free Puck; let him homeward wend...
Granting Demona's Wish
Fearsome creature who would stay Unchanged by the light of day, Remain you thus throughout the night, And be thou flesh by dawn's fair light.