Twilight

Twilight is a phenomenon in in which provinces of Hyrule lose their Light and become covered in a manifestation of light-absorbing fog. Under the effects of this fog, inhabitants of the afflicted areas either turn into Spirits or monsters of shadow. This fog is created and utilized by Zant, the Twilight King, to gradually cover the entire kingdom in shadow during his conquest. The spreading Twilight becomes a serious threat to Hyrule that Link is tasked with combating. This Twilight is distinct from the twilight that naturally occurs during dusk.

Features
Light in Hyrule is sustained by the four Spirits of Light, who act as guardians for their respective provinces. During the events of Twilight Princess, Zant steals the Light from the Light Spirits by creating a dark fog composed of light-absorbing shadow crystals similar in nature to the one encountered in the Palace of Twilight. The kingdom of Hyrule is slowly overtaken by Twilight as its Light vanishes in each province.

Once overtaken by the Twilight, the inhabitants of the afflicted area lose their physical bodies and turn into Spirits, unaware of their current state. Furthermore, the Shadow Beasts have the ability to change them into monsters.

Hyruleans normally cannot enter areas engulfed in Twilight, unless a creature from the Twilight draws them in through the Curtain of Twilight. Once someone has entered the Twilight, it is often impossible to escape or recover. Only with the help of a member of the Twili race can a lost soul or anything trapped in the Twilight escape. In each province, the Tears of Light of the Light Spirits needs to be recovered from the Shadow Insects in order for them to be revived. The Light Spirits will give Link the Vessel of Light in order to collect and carry the Tears. Once the Light Spirits regain their power, the Twilight is lifted and the inhabitants return to normal.

However, there are a select few who can survive in the Twilight without becoming a lost soul. Bearers of the Triforce can usually withstand the effects of the Twilight. Link, bearer of the Triforce of Courage, transforms into a wolf and Princess Zelda, bearing the Triforce of Wisdom, maintains her normal physical form.

Not all beings are turned into Spirits however. The enemy creatures that Link encounters are turned into "shadow creatures" within the Twilight. Bulblins, along with Keese, Deku Babas and Kargaroks are just a few of the creatures that change form under the influence of the Twilight.

Twilight Realm
The perpetual Twilight of the Twilight Realm is different in nature compared to the Twilight produced by Zant. The latter exerts a corrupting influence over Hyrule, while the former is comparable to the Twilight encountered naturally in Hyrule during sunset. The Twilight Realm itself is described as a beautiful world, and its inhabitants, albeit exposed in the Twilight, as gentle, pure-hearted beings.

Trivia

 * According to the original Japanese text, Midna mentions that Link, being a Hyrulean, should avoid contact with the Dark Fog found in the Palace of Twilight, possibly implying that the Twilight of the realm is harmless.