Demons are fallen angels. They were originally created to serve God but Satan lead a third of all angels in rebellion against God. As a result Satan and his followers were hurled from heaven down to earth. Some demons are already locked away "in eternal chains under gloomy darkness until the judgement of the great day." Others are left to roam the earth. They still follow Satan and battle God's angels in an attempt to stop His divine work and His people.
Since demons were at one time angels they are spirit beings and have the ability to take possession of a physical body. There are many examples in the Bible of people that were possessed (Matthew 9:32-33, 12:22, 17:18; Mark 5:1-20, 7:26-30; Luke 4:33-36, 22:3; Acts 16:16-18). Demon possession cannot occur with Christians since the Holy Spirit has sealed them in Christ. Demons look to deceive the world, battle angels, destroy the work of God, and attack Christians.