A demon is a resident of another plane of reality or separate universe in decadimensional space that has malevolent intent toward humans. This contrasts with Devils, which are residents of this plane of reality which have similar malevolent intent.
"Demons and other spirits aren’t like humans, however, they are concepts brought to life through the formation of patterns in the intellectual ether. Free Will is denied to them, they cannot, without significant evolution, say no to their own natures. They are sentient but limited to a very narrow purview of existence, more like natural disasters or diseases than real living beings and it is only basic survival instinct for humans to exterminate them." Carmilla - 
Demons have to be summoned by a wizard, otherwise they can't enter this universe. This may have something to do with the Contract Of Solomon, or it may be an inherent part of the way the universe is organized. Or both.
Since demons are extra-planar, they are Class 3 entities. Demons are frequently part of infernal hierarchies. There's a classification scheme for demons that hasn't been revealed to date.
A common comment is that devils can be destroyed but not banished, while demons can be banished but not destroyed. There are apparently exceptions: Tennyo, for example, finds demons quite filling.