Despite the variety of religions in Instar, most or all religions (that recognise the existence of life and the universe at all) also include the idea of malevolent, other-than-human creatures. That's because they do in fact exist; beyond that, it's a matter of history, rumour and interpretation.
Rather than appear in the world directly, demons often possess people - take remote control of their bodies, presumably without the owner's consent - and use them to do stuff, mostly apparently purposeless criminal, lewd or depraved behaviour.
Vampirism on Instar is a form of demonic possession. The loose 'categories' of demonic possession are defined by behaviour and guesses as to the type of demon.
Apart from generally being fatal to the possessed person (one way or another - see Attitudes), in the past possession has indirectly caused plenty of suffering for people with similar, natural mental illnesses.
Demons seem to have no overall organisation or agenda. There are indications that certain demons are more powerful and dangerous than others.
Certain demons can read thoughts/minds/souls. Lesser demons may only be able to read desires of the flesh. Even more than Instarrian mortals, Instarrian demons are distractible and self-centred. They are also stupid.
Combat-trained members of Offwhite City's monastic order will attack and attempt to kill demons or demonically-possessed individuals on sight.
A good few inhabitants of Offwhite and environs consider any life forms from other planets to be demons.