User blog comment:Miskos3/Fairy Tail 520: Dragon or Demon, Review/@comment-4933386-20170205092919/@comment-7418318-20170205121421

It was physical enough for Brandish to shrink it, before it grew too powerful to still be affected, so it is not just in his mind.

But as B214 pointed out, it does seem to be affected by Natsu's emotions or mental state somehow.