Monarch butterfly

"Attention Whole-Foods customers, the butterfly at the customer service desk is hatching if you would like to come watch". After hearing the announcement it was like I was back in 4th grade, so of course I abandoned what I was doing and hurried over just in time to see a brand new monarch butterfly pushing out of it's chrysalis. Even though I had seen this happen so many times as a child, I couldn't help but be in awe. Jeremy, our friend Seth and I, as well as about 10 other people, stood and watched the butterfly uncrinkle its wings and flex its probiscus. I felt like if I watched carefully I would be able to see its new wings dry infront of my eyes. How cool. This butterfly used to be an egg, which turned into a caterpiller, who after munching on milkweed, encased itself in a chrysalis and today it finished its transformation into a butterfly. But my question is, what is happening inside the chrysalis to make the caterpillar turn into a butterfly? It can't just be sleeping...