Demons are evil/fallen angels who follow Satan instead of God. When Satan was cast out of heaven, the demons fell with him instead of staying in their place as God's ministers of good. Somehow, evil was found in them (Ezekiel 28:15). A description of the fall of Satan and his demons can be found in Revelation 12:9, which says "And the great dragon was thrown down, that ancient serpent, who is called the devil and Satan, the deceiver of the whole world—he was thrown down to the earth, and his angels were thrown down with him." Satan's fall is also shown, symbolically, in Isaiah 14:12-15 and Ezekiel 28:12-15.
Revelation 12:4 could perhaps indicate that a third of the angels fell with Satan, but this is not explicitly stated. The sin of the angels is also mentioned in Jude 1:6-7. Because verse 7 compares the angels' sins to the sins of Sodom and Gomorrah (i.e. "pursued unnatural desire") this passage can be interpreted as a reference to those demons who came to earth and engaged in sexual activity with human women, producing the Nephilim (Genesis 6:4).
What is the purpose of demons? Just as God's angels are sent to praise Him and aid believers, Satan and his demons are bent on the besmirching of God's name in the earth and the destruction and deception of all those who love and serve Him (1 Peter 5:8; 2 Corinthians 4:4, 11:14-15). The Bible calls demons "evil spirits" and "unclean" (Matthew 10:1; Mark 1:27) and asserts that they are indeed the angels of Satan (Revelation 12:9). Satan and his demons also attack Christians (2 Corinthians 12:7; 1 Peter 5:8) and do battle with the holy angels (Revelation 12:4-9). Demons, like the holy angels, are spiritual beings that can sometimes take on physical form (2 Corinthians 11:14-15).
The demons are powerful, and the Bible indicates that any human being who trifles with them is entering foolish and dangerous territory (2 Peter 2:10-12; Acts 19:13-16). However, though the demons/fallen angels are enemies of God and humanity, they are defeated enemies. Satan may be the prince of this world, but greater is He who is in us than those who are in the world (Ephesians 2:2; 1 John 4:4).
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