Yea I like demon worshiping, your thinking of the barbarian village right, but it should be more than that. The barbarians should think the demon is a servant of their god, come to lead them to the path of righteousness, and whether this is actually true is irrelevant.
Worshiping a single demon also works because they could feel the gods don’t take notice of them, and that this one particular demon is more interested in their well being. The fact that they so easily switched from worshiping one demon to another, however suggest that they worship a god more than one particular demon.
Also we should think about the dynamic system of how demons/fairies actually do have more direct contact with their particular god as this would make sense. How close they were with the god would be directly related with said demon/fairies power. Also I think that it would be better to have other planes of existence in which the gods lived, because we could have it for that when a demon/fairy dies, instead of simply not existing anymore they are sent back to their native plane. Possible plane names are abyss for demons and celestial for fairies. Said demon/fairy can only come back to the natural realm by being summoned for short periods of time, or through an extensive ritual to bind them once more to the natural realm. If they die again however they are sent back to the abyss/celestial again. While banished from the natural realm most daemons and maybe even some fairies would probably plan how to exact revenge on the one/ones that killed them should they ever make it back to the natural realm.
