The Hanako, by force of will, were created by Aeternalae who wished to have the freedom to change between male and female, and anywhere in between. For some, remaining as one sex just wasn't appealing, and so their want to change their own sex instead of just others' brought into fruition a new race, because "where there is a will, there is a way."
The name Hanako, which means "flower child/children", was inspired by the flowers' ability to change between sexes. And like flowers, Hanako can become male, female, hermaphroditic, and asexual (known as "perfect" for flowers).
Like other Ovaforms, they can convert with a touch; but there's no dream walking or mind alterations needed for a complete conversion. Flowers also play a role in temporarily transforming others into their own kind, by forming a flower with a limited amount of energy that will, upon it being accepted by someone, change them for varying durations of time.
Sunlight can be converted into energy, and that, as well as water and natural locations (forests, lakes, mountains, etc.), effect Hanako because of their affinity to nature: sunlight, depending on the exposure, can invigorate (too much causing hyperactivity); water is refreshing and a relaxant; and natural locations instill feelings of content and well-being.