Demons, or Daemons, are powerful orders of beings who can interact with humans in a variety of ways.
There are five Daemons who live in the Caves of the Daemons near the Laughing Valley. They are the Daemon of Selfishness, the Daemon of Envy, the Daemon of Hatred, the Daemon of Malice, and lastly the Daemon of Repentance. These are malevolent creatures who prey on vulnerable children — except for the Daemon of Repentance, who is a more complex figure. ("A Kidnapped Santa Claus")
There are other malevolent demons in existence, like the Black Demons of Patalonia. Yet other orders of demons are like nature spirits; the Wind Demons fall into this category. (The Life and Adventures of Santa Claus)
In at least one case, a demon has a strongly positive orientation toward humanity's welfare. The Demon of Electricity is a Prometheus-like figure who is motivated to bestow knowledge of electric energy, and the advantages of electrical technologies, on human society. (The Master Key)
Influenced by Theosophy and skeptical about orthodox Christianity, L. Frank Baum was willing to exploit the ancient pagan conception about demons that is less moralistic and theologically loaded than the standard Christian view. In The Master Key, Chapter 2, Baum quotes Hesoid on "holy demons" that are "guardians of mankind," and Shakespeare on the ancient Roman concept of demons as "Noble, courageous, high, unmatchable."