Demo is short for demonstration. It may refer to any of the following:
A recording made to exhibit the capabilities of an artist, usually to obtain a contract with a label or to obtain a booking.
A recording made to present a new song, usually recorded by or for the songwriter for submitting to an artist or producer in hopes of inducing the artist to record it.
A recording made to introduce a new song to other members of a band or group to aid in rehearsing the song prior to performing it live or in a studio.