Squid Form

Donald Duck is turned into his Squid Form when he visits Atlantica. While in this form, he is half-duck on the upper part and half-mollusk from the waist down.

Kingdom Hearts
In the first game, Donald is able to use magic that he has learned from other worlds and can still fight with his staff.

Kingdom Hearts II
In the second game, Donald's ability to use magic and default magic staff are removed as the design of Atlantica is converted to a world whose story progress is through songs.

Kingdom Hearts II
The Wise Little Hen (1934)

''The Royal Court Magician. He's traveling the worlds in search of clues to the whereabouts of the King.''

In his previous travels, Donald and his friends helped to defend Atlantica from Ursula, the sea witch.

Exception
Although Donald turns into a squid when he visits Atlantica in most of the games, there has been one exception in Kingdom Hearts: Chain of Memories where he, Sora, and Goofy all retain their true forms.

Trivia

 * Because Donald is a magician, it's made clear that Donald's squid form is referenced from the sea witch, Ursula, who is an octopus.

Donald (Pieuvre)