My studio is currently hurtling towards release on our next game Wildmender, and we put a demo out. Of course, we're also doing localization since that by definition has to happen once the text of the game is finished. So right now we have the option to switch language, but all that does is inserts totally placeholder google translated text we were using to test layouts and fonts. QA wouldn't have flagged it because they know it's not complete. We wouldn't catch it because we all play on English. And players wouldn't know this because we have language support listed on our steam page and a language selector on game. This will probably cause some confusion to players who don't speak English and can't ask for clarification from us and so they may think it's always going to be machine translated. We don't have time to do a whole translated bit about how translations are in progress and we can't pull it for the players because many would prefer a rough translation over English text. And of course we're all super busy trying to finish the game so the option we choose is to do nothing and deal with the consequences.
The tradeoff makes sense for us right now (since we need the positive attention more than we think we'll be hurt by any negative reactions), and thankfully demos don't let people leave reviews, but for many games, that kind of negative PR could really have impact on sales and image. And there's NEVER a way to catch all of these issues during one of the busiest periods of development. And once your game is out, putting out a demo makes a lot less sense, since frankly, a lot of the people that buy games don't get past the first hour, so you're risking real reduction of sales if they play the demo and don't buy the game later.
I think Steam's next fest events do a good job of making them more viable, since a lot of games with demos from unfinished games generally sets the tone of the event and the demos in it much better than releasing it into the wild with no such context, and the time limited nature reduces risk. But it's always a huuuuuge tradeoff. I'm not surprised game demos were pretty much dead until this event brought them back.
Anyways, remember to wishlist games you love! It is kind of horrifying how important it is in supporting developers pre-release!