Is it possible for someone to develop Dementia to where there were just subtle episodes of forgetfulness to literally overnight becoming delusional, confused to the point they don't remember where they have lived for the past two years or that their late husband of 9 years is no longer with us? No doctor has been able to diagnose this.
Severe symptoms that come on suddenly MAY be caused by something other than dementia. A thorough evaluation is needed. There may be something treatable going on, such as a vitamin deficiency or a urinary track infection.
It is also possible for dementia to develop very suddenly. My husband had a sudden meltdown one Saturday morning, and that was the beginning of full-fledged dementia symptoms. Looking back I could see very subtle episodes of not-normal behavior but the dementia came on with a bang. This also happened with one other person in my caregiver's support group. So sudden onset is not typical, but it certainly does happen. (My husband had Lewy Body Dementia. I don't know if that is more prone to sudden onset than other kinds of dementia.)
This dear lady does need medical evaluation and a treatment plan. Have she seen a behavioral neurologist or a geriatric psychiatrist yet?
I'm not saying it's not one of the other things, but UTIs are the easiest thing to check for.
Anyone can get delirium, but the more vulnerable your brain, the easier it is to tip into it. As others have pointed out, people with early/mild dementia are usually mentally using everything they have, so delirium can make them suddenly seem much worse. People with underlying dementia also often take days to weeks (sometimes even months) to recover to their best mental function. Some never fully recover and instead settle to a new lower "normal".
Other thoughts: some forms of dementia (like Lewy Body) are associated with cognitive fluctuations when people are much worse on some days than others. Lastly, a sudden mental change is sometimes due to stroke or another vascular dementia hit.
Re diagnosing dementia: dementia is supposed to reflect a permanent decrease in mental abilities and the doctors are supposed to rule out reversible causes (including delirium). But often when we evaluate people during or after delirium, we find out that the person was having some signs concerning for dementia beforehand.
Good luck, I hope you get the answers you need soon.