How does gravity convert potential energy to kinetic?

[sayetsu]

If I hold a ball above the ground, it has potential energy. Once gravity pulls on it, it becomes kinetic. What is gravity and how does it convert one kind of energy to another?

 

[Dale]

Energy is converted or transferred by work. This is a force (gravity) applied over a distance (falling).

 

[kuruman]

If I hold a ball above the ground, it has potential energy.

That's a common misconception often asserted in textbooks and websites. Here is the correct way to see it.
Potential energy is a shared quantity and it takes two to "have" it. When you hold a ball above ground, the two-body Earth-ball system has gravitational potential energy. Now you can choose your system any way you please. Specifically, if you choose just the ball as your system and you drop it, then the Earth does work on the ball which acquires kinetic energy. Because the position of the ball changes relative to the Earth, the potential energy of the Earth-ball system will also change. Mechanical energy conservation requires that the sum of energy changes be zero:$$\Delta K_{\text{ball}}+\Delta K_{\text{Earth}}+\Delta U_{\text{grav.}}=0.$$Now if you drop the ball, the Earth's gain in kinetic energy is very small relative to the ball's because the Earth's mass is so huge that its acceleration is about 10^-24 times the acceleration of the ball. Thus, people omit the $\Delta K_{\text{Earth}}$ term from the equation and simplify the picture by saying that the ball "has" all the mechanical energy there is and shares nothing with the Earth. It's a simpler picture but distorts how people think of energy transfers between kinetic and potential terms.