According to the vedas all living beings in the universe belong to two groups and those are: Gods and Demons. ( Basically good and evil )
Other words for those categories are:
Suras and Asuras ( Sura means a being of light and the a- in front is a negation in sanskrit )
Devas and Asuras ( Deva is often used instead of Sura )
Devotees and Demons ( The word devotee is often used for the good people, since every good person is a follower of god while demons are just egoistic and followers of other demons )
Demigods and Demons ( The good people are essentially demigods, they cannot be the one god, but through following god, they develop similiar characteristics to god and therefore become smaller versions of the one god )
Demons are the antagonists to god in the creation, therefore a demon is defined as someone who is against god. Demons usually fight god through inverting the creation, meaning to turn everything that is good into bad and everything that is bad into good. For example demons promote to commit sins.
A simpler definition of a demon is that a demon is a self serving entity, which in itself is already the ultimate perversion of the creation and the biggest sin, since the creation is there to serve god, but a demon tries to invert the creation and make it about serving himself, which he thinks will make him god. The lower lifeform has to serve the higher lifeform, that is the law of the universe, but a demon refuses to serve the creation and tries to bring others to serve him, even though he himself is a lower being.
Overall it is important to understand those categories to understand what a demon is. Identifying a demon is a whole other topic, the Bhagavad Gita has a whole chapter dedicated to identifying demonic qualities.
It is not that easy to clearly identify someone as a demon or demigod, since everyone has qualities of both in him, especially since the demons and demigods are fighting to gain influence over the humans, but in most cases one can see a pretty clear tendency already. There are always higher and lesser demons, the higher evolved a demon is, the more clear he can be identified as a demon. Normal people will sometimes be egoistic and sometimes not, but a 100% demon will be 100% egoistic and never care about anyone else.
In the vedic scriptures the demons always try to become god and in that process cause great suffering to all other living beings and in the end they are always killed by god.