  While graphene is a semi-metal, a recently synthesized hydrogenated graphene
called graphane, is an insulator. We have probed the transformation of graphene
upon hydrogenation to graphane within the framework of density functional
theory. By analyzing the electronic structure for eighteen different hydrogen
concentrations, we bring out some novel features of this transition. Our
results show that the hydrogenation favors clustered configurations leading to
the formation of compact islands. The analysis of the charge density and
electron localization function (ELF) indicates that as hydrogen coverage
increases the semi-metal turns into a metal showing a delocalized charge
density, then transforms into an insulator. The metallic phase is spatially
inhomogeneous in the sense, it contains the islands of insulating regions
formed by hydrogenated carbon atoms and the metallic channels formed by
contiguous bare carbon atoms. It turns out that it is possible to pattern the
graphene sheet to tune the electronic structure. For example removal of
hydrogen atoms along the diagonal of the unit cell yielding an armchair pattern
at the edge gives rise to a band gap of 1.4 eV. We also show that a weak
ferromagnetic state exists even for a large hydrogen coverage whenever there is
a sub-lattice imbalance in presence of odd number of hydrogen atoms.
