Chapter 520 was a really interesting read! Warning this is a chapter analyse post so it is riddled with massive spoilers!
It starts off on quite a big announcement that Irene killed herself to protect Erza. This unfortunately was not a surprise. We were waiting to see how the whole Erza/Irene conflict would work itself out. I am just wondering if she is really dead though. So far quite a few characters have ‘died’ and were miraculously saved. It is also confirmed that Makarov is dead as Wendy can no longer smell him on the battle field. Erza is left to comfort Wendy as she realises what that means.
Finally we get back to Natsu where he is talking with Igneel. It is explained that Natsu is dying because to opposing magic are fighting within him, his Dragon magic and his Demon magic. Hence the name of this chapter. Natsu is told he must decide for himself if he is a dragon or a demon.
With Natsu’s choice made he finally wakes up and yes he questions why Lucy is naked. With the death of Irene her magic is undone and Magnolia is returned to normal. People grabbed hold on one another so as not to be separated again.
Natsu, Lucy and Happy find themselves in Lucy’s bedroom and will now make their way to the guild.