Demos are an art form. They blend mathematics, programming skill, and creativity into something incredible to watch and listen to. Demos are not actually functional or interactive, in the main, but then nor are portraits, or cds. Perhaps you can think of a demo as a music video on a computer, but with equal emphasis on the visuals, the music, and the code. It's something to watch, enjoy, and marvel at the creativity of.
Demos can be beautiful.
Demos are made because people want to construct something that looks good. People make demos because they want to make something that will be spread worldwide, seen by a lot of people, and appreciated by them for being skilfully designed. Demos are made for art's sake, and for prestige. In a group, each member has his own work to complete. Coder, he is the one who program the different effects of the demos.