Once again, this post is largely taken from the ENWorld forums - however, take heart! A good deal of it has been edited, re-written, and expanded upon, so even if you've read it before, it's worth another look-over.
Many people believe that Demons only exist as evil spirits of sin and temptation, while in fact it is usually the fey that fill this role. Many others believe that the demons' chief concern is torturing sinful mortals in the afterlife, which from one interpretation might be accurate but is missing a large piece of the puzzle. Demons at the core of it are little more than clerks of the afterlife, sorting people and managing people. They are bureaucratic to a fault, and do their job with much paperwork, much delay, and much apathy.
Demons are inter-dimensional parasites who discovered our dream plane and decided it would be a good place to live. They are a group of grotesque creatures who originally had no concept of different species. Demons themselves are very individualistic, and extremely sexually potent. Despite there being possibly hundreds of different "species" of demons, all demons can interbreed with one another and produce fertile offspring. Further, a demon can breed with literally anything else, even the astral bodies of non-demons, and produce a fertile, demon offspring.
Demons have access to contemporary real-world technology. In some cases, their technology seems to be more advanced than the technology of Earth. (For instance, demons have access to hover-cars and robots.) Demons also seem to be aware of the real-world earth, and it is not uncommon for demons to have access to meta-game knowledge. For instance, during the brief time the demons were on Aarn, they settled in what is now the Shanbar Province of the Cerenbaun kingdom, and named all the major cities after real-world European countries.
Demons also seem to believe in earth religions, such as Christianity, Hinduism, Judaism, Islam, Buddhism and others. Because demons have no magical powers themselves, they have no idea what happens when one of them actually dies. Demons typically have a natural lifespan of four thousand years, though it has been known for some demons to be even longer-lived.
It is cosmically illegal for demons to personally travel to Aarn as per an agreement with the gods, so except for extremely rare circumstances, demons have not been seen on the plane of Aarn in the flesh. This is good for the Aarnians, because despite the demons' deficiencies in magic, they are extremely resilient physically and resist most types of damage. They also have skills with technology that put the achievements of the race of man to shame.
Demon technology seems to be purposefully designed with a "retro" look. Their buildings, their vehicles (even the hover ones) and their most fashionable clothing styles are designed with an American 1950s vibe. The hell of Bureaucracy itself is an entire planet of interconnected sprawling cities, and if it weren't for the inhabitants and flying cars, one might actually think it was a city on Earth. Occasionally demon technology or artifacts can be found on our world, like demon constructs (robots,) weapons (AK-47s,) and tools of genocide (nukes.) These monstrosities are better left studied but never activated or used.
Demons can take advantage of the physics of the astral plane to possess native Aarnians to either go on vacation, adventure, or collect magical items on Aarn. The demons cannot make magic items themselves, so they often go on scavenger hunts and then send the artifacts they find back to Bureaucracy, their home. A demon controlling an Aarnian mortal's body is not considered a breach of their agreement with the gods. As an added bonus, when a demon controls a mortal's body, any of that mortal's elemantic potential is supercharged. The demon can use the mortal's body as if all of the mortal's elemantic abilities were completely maxed-out. Of course, the process of possession is heavily regulated and it is said that waiting times for a Demon to possess someone can often be in upwards of 2 years.
A demon can also possess people without influencing their behavior - in this case, the mortal still has complete control over him or herself. Instead, the demon appears as a noncorporeal apparition that only the possessed mortal can see. Usually the demons use this to communicate with a certain mortal and present the deal - often the mortal doesn't even realize he or she is possessed. In fact, the demon doesn't even need to present itself to the mortal. In some cases, with the demon controlling the mortal body only when the mortal is asleep, and never manifesting while the mortal is awake, a demon can spend years possessing a mortal with none the wiser.
Demons are also known for tempting mortals into so-called "deals with the devil." The demon will possess the mortal and present itself to the mortal as an apparition. Generally, the demon asks for the legal rights to produce and create entertainment (television and movies, not that an Aarnian would know what those are) based on the possessed person's life. In return, the possessed person receives dividends and residuals from the deal - guaranteed income for life that can bring many people much closer to their actual life goals. Even after the person dies and goes to hell, they will still receive the money - money in hell can be converted into Aarnian coinage, and vice-versa. There are drawbacks to this deal however - if the possessed person ceases to be popular, the money dries up. Also, the possessed person permanently loses the legal rights to tell stories about his or her own adventures. Doing so is considered a breach of contract, and the demons take that very seriously.
As a rule, demons seem to have a fetish for paperwork. The organization of their society is built around forms. Everything, even breathing, is illegal without first filling out the right forms. (Parents will usually fill the required breathing, eating, and defecating forms before their child is born.) Conversely, everything is legal if one can actually find the forms for it. Many forms are made extremely hard to find however, and a couple (such as the forms to travel to Aarn in the flesh) do not exist.
Aarnian mortals who are sent to the hell of Bureaucracy are also subject to these rules, which keeps all but the most bureaucratically-minded mortals out, much to the demons' collective relief.
The other 8 hells however are not subject to these paperwork rules, and sometimes demons will go to these hells for a "vacation" in order to temporarily escape their paperwork obligations, though certain rules and laws do still apply. Vacationing demons will usually annoy the actual residents of that particular hell, whether it's a hell the resident enjoys or not.
Like fey, demons can also invade and influence the dreams of mortals, and in fact, this is usually the first step of a possession. It is very rare for demons to do this however due to how regulated the possession process is.