I am interested in buying bitcoins to easily and quickly send money to family in Bulgaria. Would they have to convert it to euros and only be able to make online purchases? Or is there some way they could get physical cash from converting their bitcoins?
When bitcoins are converted to local currency (EUR, USD, BGN, etc.) and you want to take control of them yourself (as opposed to it being stored as that currency in the exchange you're using), they typically are sent to your bank account. From there, you could easily withdraw the money as cash. There's nothing that would make them have euros but only be able to spend them online.
You and/or your family should research the available options, and how they compare to more traditional international money transfers and choose what works for you. While the bitcoin transaction itself has only a tiny fee, buying and selling might be more trouble and expense than it's worth.
There are companies for selling bitcoin for euros. As I've only ever wanted USD, I don't know which are best. Either you or your family will need to do your homework and find a service that is reliable. Some companies who do this are unreliable or slow. Just Google "sell BTC for euro" and find one with good reviews. Bitcointalk is a good place to check. If no one is complaining about a company there, the the company is probably legit.
You can send them the bitcoins and they can convert them in fiat at localbitcoins Bulgaria