I can't help it. Demons have been badass since- well, actually, since time immemorial, if you think about it. But videogame Demons have been badass to me since the days of yore. Take the Devil May Cry series, love it or hate it, as an example. In that series, you fight Fallen Angels, Embodiments of Evil, mythological guardians/monsters... I'm looking at you, Cerberus from DMC3
While it is quite simple to take the whole Epic Battle thing too far, as many a game has demonstrated, if a game can pull off truly Epic Battles(read: fights that don't take 40 minutes), it makes the user feel that much more accomplished and eager to challenge the rest of the game. This is what all games should strive for. It's the epitome of good design. To me, not much quite pulls this off the same way as fighting a powerful demon does.
Be they human-sized or house-sized, Demon boss battles are always fun, if not always easy, and always make the player feel as if the world really [i]does[/] hang in the balance. That level of immersion is where a game's credentials can truly shine. Granted, poor gameplay or a user-unfriendly control scheme can ruin this, but if you have mediocre controls and a decent plot leading up to it, fights like these can make a game worthwhile.
Take the Otogi series as another example. This game had controls that were average, though the camera was sometimes difficult, and a story that was a little sparse, but the combat and abilities were a blast, and the boss fights against Demons of Japanese myth were an experience I still remember fondly to this day.
Almost every time a game includes a Demon as a boss, you have a ctirical ingredient in the magical recipe of fun.