The first demons were created by Lucifer when he was cast out of Heaven and into Hell. Amongst the first ones he created were the white-eyed demons, Princes and the Knights of Hell. They represented the highest authority in Hell after Lucifer (who was locked up and now believed dead), but are all believed to be extinct now.
This leaves the rule of Hell to any demon powerful to climb the ranks to the top. The long standing King of Hell and formerly King of the Crossroads, Crowley, is also believed to be dead. The current ruler of Hell is unclear. (In the series it’s Rowena, but as a recent development we will not make this a thing.)
Normal demons are created from tortured human souls. Souls end up in Hell through deals made with demons (Crossroads or other kinds), or by being a witch. The tortured souls ultimately gain supernatural strengths and the ability to possess humans, but this process can take a very long time. In most cases, by the time a souls turns demonic, they have already forgotten they ever were human.
Demons have to possess humans to walk the earth, and they don’t need permission for it. They can be exorcised with incantations and trapped in a body by some special spells or bullets. They can be killed while possessing a human (will also kill the vessel), and the vessel can be trapped by devil’s trap sigils. There are also multiple spells to summon or communicate with various types of demons.
A regular stab wound or bullet won’t kill a demon. A magic blade of a kind is necessary for it. This can be a demonic knife or an angel blade, for example, or some other form of supernatural weapon. Some higher level demons might not die even from these, and would require a very specific weapon, such as the First Blade.
The Devil’s Trap sigil, which captures a demon and renders them unable to leave a vessel or physically move beyond the sigil’s outlines.