I think the main draw of transformation erotica is that it is one of the few things which cannot be experienced otherwise–most of the other kinks can be done in the real world, but having an elephant-sized cock, boobs that weigh more than two jugs of milk, or anything else of the sort–without complication–is sort of impossible. In a way, the fetish self-fuels. For most, the first taste is just a little beyond what should be possible, and it goes from there.
Jumping off from that point, the truth is that people like being someone or something other than themselves–it is an extension of the elements of human curiosity. Vampires, Lycans, and the other “monsters” are from the same space in the collective unconsciousness. People like to fantasize about others–not just about physical appearance either, but, other traits as well, and transformation is a way to explore that which is far less harmful than, say, regarding another race whole cloth as subhuman. Like, for me transformation can be used to show humanity in the strange, in the weird, and the other. On the same token, fiction with such themes and elements can sometimes be therapeutic for those with dysmorphia or some other disconnection with their body (image). The fantasy of taking a single pill and suddenly having one’s outsides match their inside can be a soothing balm after a heated day.
That is not to ignore the unsavory. The same strengths transformation brings also gets leveraged as an avenue to justify, rationalize, or otherwise dismiss treating objects of attraction as anything more than just that, objects–especially people who feel that the fantasy extends to real life. I have seen my fair share of femsub/bimbo blogs get bombarded with heaps of unsolicited sexual attention from jerks who think that because a woman gets off on being dehumanized and/or embarrassed by their dom(me) of five+ years that they are just going to drop their panties for some stranger who calls them a c*nt within the first six words. That is a lot of what I strive against–and I realize that what I am doing is perhaps as effective as protecting a sandcastle by trying to convince waves to break on a different beach with just words. However, enough people can build something great together–something to protect that castle.