"to twiddle" means to press buttons or switches, turn dials or move things in a random way. For example, if your TV is broken, you might twiddle with the remote to try and fix it.
In this case, the wizard is 'twiddling' - doing things that seem random or odd - in order to do something magical (make someone look like a skeleton). Either he's casting a spell, or he has some desk with buttons on it that do this.