Candice has the power of illusion. She does not physically become another person or alter reality, but "make[s] people see what [she] want[s] them to see". So far, no character has been able to see through her illusions, but have been able to guess through her actions or syntax that things are not as they appear.
Her powers are not limitless. It was never made clear in canon what were her limits on creating illusions on the environment around her, but we are going to say it was about 6 yards for now.
She can't turn herself into an inanimate object or animals. She can't make herself invisible. She can only disguise herself. She can alter how the environment around her looks. She can hide herself in this altered environment by disguising herself as another person, hiding in the shadows, or conveniently behind a created door. She is always there, even if your character can't see her.
See also:
Interacting with Candice Lies Candice will Tell The Truth About Candice Contact the player