Puffy Fluffy is a character that appears in A Pal for Gary. He is a nudibranch (although not resembling an actual nudibranch at all). SpongeBob bought him so that Gary wouldn't be lonely while he was at work, but he turned out to be a monster. SpongeBob was ignorant of the situation and failed to notice anything wrong with Puffy Fluffy, even after seeing its monster form, while Gary was wrapped up by its tongues and was about to be eaten. SpongeBob was also about to be eaten but remained oblivious, even after Gary saved him. Puffy Fluffy ran away after Gary tied up its tongues together with a leash and Spongebob blamed Gary by making Puffy Fluffy ran away.
Puffy Fluffy's full grown, vicious eel-like, form.
Nudibranches, which is what Puffy Fluffy is, are actually sea slugs.
His multiple tongues might be a reference to the Graboids from Tremors.
When getting Puffy Fluffy from the gypsy, she says something about it being dangerous. This is possibly a refrence to the movie Gremlins, in which a man buys a strange pet from a chinese shop owner, which refuses to sell it to the man because it is dangerous.
Nudibranches appear as the main antogonists in the online game, "Gary's Revenge".
Puffy Fluffy's ploy is to trick innocent customers into thinking they're cute, when they're actually monsters, Puffy Fluffy was probably jealous of Gary.