The Demon was imprisoned in another dimension, and Mok sought to free it to give him immortality, legendary fame and ultimate singing. Mok tried several times throughout the film to unleash the Demon, all with disastrous consequences. It was only when Mok realized he needed an overload of power that he managed to create a gate to the Demon's dimension.
The Demon came out of the gate in a burst of nuclear orange energy and tried to devour Angel, the victim Mok had chosen. But Omar and the rest of his band appeared and fought the Demon, eventually driving it back with their singing power.