It doesn't fool anybody, but people do it to seem less offensive than they are. It's p[litical correctness in a nutshell.
The use of deamon in place of demons first appeared in DnD when all of the demons were renamed to deamons and many of the flavor texts for magic were stripped down or removed entirely, in order to reduce the level of occultic themes in the game.
Later, the Deamons and devils were renamed to Tan'arri and bat'tazu, and all the subtypes like "type IV demon" "Chain Devil" were re-named to things like "Kyton". The following edition gave up and went back to demons and devils and gave the subtypes names that make sense (but kept the gibbersih names around as an alternative).
Leaving me, as DM, to feed my player's characters to Galabrezu and Cornugons or Bearded Devils and Horned devils (which are the same things) without having to call them Fiends of Battor instead of Devils from Hell. (--not that anybody couldn't have told you what they really were.)
