The dictionary definition of a demo is “a demonstration.” However, in music terms, a demo is an early recording of a song.
A great example is ‘Sometimes' as opposed to 'Eh Eh (Nothing Else I Can Say).’ Even though they both have completely different lyrics, ‘Sometimes’ is the demo of ‘Eh Eh.’ Notice how they both sound the same? That’s because ‘Sometimes’ lead up to ‘Eh Eh.’
A demo is also a rough recording of a song. Another example is the ‘Mary Jane Holland (demo)' as opposed to 'Mary Jane Holland.’ Notice how the vocals in the demo sound very rough in comparison to the final version? That’s because the vocals weren’t finalised yet.
Now you’re probably thinking “why would someone want to hear the rough vocals of a song?” Well, the answer is: It’s nice to hear the creative process of a song. It’s nice to hear that ‘Mary Jane Holland’ originally started with “I need to respond” instead of “lady of the dame.” It’s nice to hear that at one point, ‘Mary Jane Holland’ had samples of George Putnam’s voice.
It’s kind of hard to explain to someone who doesn’t know what it means. If that didn’t help, just message me again and I’ll try to help clear things up.