What is she?
Well, it's open for interpretation I think. Some suggestions I liked were 'iCloud,' 'Hurricane Sandy' and 'All Dogs Go To Heaven.'
Why is she dressed up in an handcrafted Halloween Costume?
She was participating, for the second year, in the annual Doggie Halloween Costume Contest. Last year she was a LEGO® and although she didn't win (technically), for all intents and purposes she did as she was featured on the poster for the event this year. Yes, she is literally a poster
What is that cloud costume made of?
It's a paper-mache structure with laboriously applied pillow stuffing. Below is a photo of Tokyo trying on the costume mid-construction.
So, wait, can I see a photo of her doing some cloud-like stuff? For example hanging out with a plane or a superhero?