'Demon' is a colloquial term used for the hybrid humanoid being that is created when a Human and a Spirit create a pact to bind their souls together. The resulting process is known as Demonic Transformation and results in a physical fusion of both parties, creating a magically empowered humanoid creature who largely resembles the human part of the fusion. However, the differences - typically a change in skin coloration and the growth of horns and sometimes a tail, as well as other biological changes - come from both the attributes of the Spirit part and the Demon Primarch chosen during the transformation.
During the process of Demonic Transformation, the two halves of the fusion are informed and evaluated by the Demon Primarchs as to what the pair's goals are, and who among the Primarchs might be the best fit to help see those goals through. This choice not only informs the magical boons planted within the transformation, but also the appearance of the resulting Demon.