He was watching, wide-eyed, his house being demolished.
Should there be commas around wide-eyed? There are some examples online but its like half-half. Some of them use it, some don't.
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In this particular case, without any further evidence or context to the contrary, the commas are correct.
There is a detailed explanation on this grammar site. The examples given in the section "What Is Parenthetical Punctuation?" are relevant.
Allow me to disagree politely with Peter Jennings, always bearing in mind that the use of commas is largely a personal choice.
I see two distinct ideas in the sentence. The first is that he was watching wide-eyed. The second is that he was watching his house being demolished.
The obvious pause in the sentence comes after wide-eyed. You could begin or end the sentence with wide-eyed as an alternative (albeit somewhat uncomfortably). In either case, you would use a single comma before or after wide-eyed.
As a similar example, I would write: He was walking slowly, his thoughts on his career. Clearly, you would not insert a comma before slowly. Why use one before wide-eyed? It serves exactly the same function of modifying the verb.
You might argue that you wanted the reader to pause after the word watching. Well, then, fair enough. Insert your comma. It's your call.
In this context, “he was watching, wide-eyed, his house” means that he was watching and wide-eyed. The adjective is modifying the subject rather than the object. You could also write, “Wide-eyed, he was watching his house ....”
Without the commas, a sentence like “He was watching, wide-eyed, houses ...” would have become, “He was watching wide-eyed houses ....” Then the adjective would be appearing to modify the object, houses, rather than the subject, he.