Daemons were originally neither good nor evil. They often possessed both positive and negative traits, but they did tend to be tricksters with a darker than average sense of humor. They could become corporeal fleshy creatures or incorporeal spirits and phantasms at will.
People were most likely to encounter daemons when they themselves were faced with major life changes or transformative events. Such encounters were rarely without danger, but they gave life a depth and a degree of meaning that is utterly lacking when all is calm and under perfect control.
Change is rarely all-good or all-bad, but it is almost always frightening. Encountering a daemon almost was a sign that deep and major change was on the way, either personally, culturally, or both.
Christianity Demonizes Daemons
The Christian Church was the first to divide and separate the daemonic realm into a struggle between evil supernatural creatures versus good supernatural creatures with humans in the middle. This was a substantial departure from the original Greek concept of varied and naturally ambivalent creatures that mediated between people and the Gods.
Now, instead of the daemons standing between people and the divine, between the natural and the supernatural, people stood between good and evil daemonic forces that were themselves supernatural. Humans moved to center stage, the demons to either wing, and the Gods of antiquity were kicked out of the drama entirely.
Demons, by contrast, did the Devil's work and either tried to seduce human beings into evil by stealing their souls, or else tormented the good and the holy out of sheer resentment of their relentless goodness and holiness.
Discernment suddenly became a hot topic. Good demon or bad demon? How to decide, what to do, what to do?
Clergy stepped up to 'help', and thousands of people were burned alive and tortured to death to save their souls and cleanse them of unholy daemonic associations.
With the dawn of the Age of Reason, demons also came to be associated with ignorance, while angels were trivialized as fluffy tokens of a kind of naive trust in a benevolent higher power. This trivialization further exacerbated the Christian divide between good and bad demons that was already well underway, and also tended to discredit and belittle the daemonic realm in general.
Weirdly enough, during the transitional period between the Middle Ages and the Age of Enlightenment, many learned men of the Church practiced alchemy, science, and angelic/demonic magic side by side without feeling any conflict of interest whatsoever--but this eclecticism did not last.
By the end of the 17th century, magic, daemons, and even most forms of religious belief were pushed aside by science, which declared itself the one and only true way to know anything about anything.
Daemons and Demons
The complex, mercurial nature of the daemonic realm has been successfully reworked in the popular imagination into something terrifying and wholly bad.
This re-imagining of the daemonic is a serious perversion of its original and true nature.
The main difference between the daemonic and the demonic then is the pejorative taint attached to the latter term. Daemons have literally been demonized: first by the Church, and then by science.
Depth psychology (Carl Jung, James Hillman) preserved something of the original daemonic realm in the form of the Jungian archetypes and the concept of personal inner daemons that drive creativity (kind of like a muse, only more relentless).
Depth psychology instead made the polarization of the daemonic an inner/outer affair. Demons were neither good nor bad but they resided inside the personality: they were defined as psychological phenomena without physical substance. This too is a significant departure from the original meaning.
Are Daemons/Demons Real?
Yes. Yes they are. But you have to expand your understanding of reality in order to accommodate them, and you also have to let go of the need for total personal control, and embrace instead the notion that personal transformation is a major part of life, that tranformation is ongoing and unavoidable, and a that it is a worthy goal and one of the great joys and adventures of being a creature.
Until that happens on a grand cultural scale, the daemons/demons are likely to haunt and scare us, and scientists are likely to keep turning up their noses at them and laughing.