A matrix becomes diagonal when sandwiched between change of basis matrices formed by its eigenvectors because it transforms into the eigen-basis. In this eigen-basis, the matrix equation M e_k = λ_k e_k indicates that M takes the form of a diagonal matrix with eigenvalues along the diagonal. This transformation is a result of the properties of change of basis matrices, which reframe the matrix to act on the eigenvector columns. For clarity, performing concrete examples can help in understanding this concept. Ultimately, the diagonalization reflects the matrix's action on its eigenvectors.