Demons

Demons are a purposefully mysterious, mystical, inscrutable entity that is not anthropomorphized. They are not just another human-like faction.

As such they have no political structure, economy, or individuals to speak of.

They don't really have characters other than the demon queen & king, who are not really characters, but more whispers from the past.

Souls are a force of nature, non-sentient. The demonic forms they take on are an afterimage of the Demon Queen's hatred for the humans who persecuted her and called her a witch.

Eventually the Demon Queen's will seeped into all the souls and gave them instincts, however the demons are still not capable of reason. Demon souls are immortal, indestructible energies that can be harnessed by the technology of necromancy.

In the structure of the story they serve as a "punishment from heaven (despite heaven not really existing)" that humans overcome with sheer force of will and power. It's really to make humans that could beat them look extra cool and dominant and the humans who succumb to them weak.

What I don't want.

The way the system is set up, and what a lot of fantasy stories does is have some kind of noble savages, or even a natural force correcting humanity's ills, and it's very easy to fall into that kind of trope. That's just the literary tradition that I've been exposed to in modern fantasy, and I've always hated that shit. I definitely do not want that, don't turn it into WarCraft's orcs or StarCraft's zerg, or some kind of native american analog.

The demons are neither animals with emotions and values for survival, nor are they a predictable, natural mechanism. I really want them to be alien, unknown, and unknowable. I want them to operate in mysterious, illogical ways.

Mechanics

They are made of souls that could manifest in different ways. The souls infest people kinda like Yeerks from Animorphs. Strong Necromancers can have an spiritual immune system against it.

What Demons / Demon Souls Are In Reality

This is never explained in the game, but demon souls are purely an inanimate force like gravity or something.

All characters such as individual demons, the demon queen and demon king are an inappropriate anthropomorphization as humans are wont to do.

Humans in their greed for sucking demon souls from annilm created the demon (as physical monsters) from their own darkness.

Demon souls are an infestation and can kill people, but in practice... it doesn't really matter. Thinking of them as people or even yeerks are an inappropriate anthropomorphization. They are more like the mitochondria, this parasite who's there and potentially helpful, but since neither the human nor the soul has this magical thing called a "will", it really doesn't matter.

• As an aside, as a materialist, human actions are a result of the physical structures of the brain, since the demon souls are purely mystical energy they don't affect the brain and hence don't do anything. However only necromancy can control the demon souls and make it effect the physical world.
• Hate of the demon infested is therefore basically unjustified from a practical POV, it only makes sense from a human supremacist POV.

The division is therefore incorrectly seen as "an accord" with the Demon Queen. Let's be clear that that is false and is propaganda by C2. In the present day nobody other than C2 knows this, and at the end of the game this fact still isn't understood by the MC or anyone else.

The Demon Queen doesn't exist. C1 and C2 discovered the division on their own and used it to solve the issue of the demons.