It should be noted the Greek origin of the word demon means spirit or divine being. The original term thus did not imply either good or evil.
But the word used to refer to demons in the Japanese versions of the games is akuma. That actually means evil demon or devil. When the early games use English to refer to the akuma they usually spoke of devils, as in Devil Buster which was the title of the game that was the demon summoning program.
Demons you befriend are called nakama, which usually means colleague/fellow but in this case the ma is replaced with the ma from akuma, so it means fellow demon.
Angels are supposed to be good maybe, but the stance of some of the games was that the angels and god are actually the true evil who would claim a monopoly on being good to denounce the other demons.
So it's mostly a perspective thing. Demons thought evil might not actually be and angels thought to be good might actually be evil (too). In the end the player has to decide, that's why they get to choose their alignment.
