I think the (re)advent of demos has been an amazing boon for the industry that it forgot. Whether simplified full games or up-to-a-point full releases, it's great to give things a try before you buy. Demos were huge in the 90s, and then capitalism thought it knew better.

I, for one, have bought more games this year in part due to the demos, whereas I used to demure to frugality and concern over refund policies.

I've added a number of games to my wishlist I probably would have blown past thanks to a great demo.

The flip side is, sometimes the demo shows a promising game that doesn't quite deliver on the original premise or introduces new, chunky systems for no reason and it's all the more frustrating because the demo got my hopes up.

Sadly I've seen a few games available for free recently which are slightly deceptive in mentioning that they're actually only demos. The example that sticks out is Age of Empires III: Definitive Edition, not to be confused with Age of Empires III: Definitive Edition (Base Game), a paid DLC which is actually the game. Obviously you see what's going on pretty quickly, but the headline "game is free" is not the same as "demo available"!

I'll answer my question in the comments.

I think this business model is likely suitable only for a few types of games:

Games with a repetitive gameplay loop. Multiplayer or single player, but something where you want to start another run/match/game when you finish.

And sandbox games where there's no limit to the gameplay.

But for games it's suitable for, the free marketing you get from content creators is the best publicity you could hope for, and a great way to stand out in an increasingly overcrowded and competitive market.

Thanks for suggestion. I checked the trailer, but I don't think it's worth for me to try the demo. It's just not my type of game.

I myself addded 3 games to my wishlist after checking out the demos on steam this year. First one was manor lords back in march. then came Pagonia and enshrouded in october.
I am sure that releasing demo versions of games can make a difference. Many studios lack the financial power do do months-long marketing campains. Many players are even bored by such campains are are more impressed when they can get their hands on an upcoming title instead of having to watch the same trailer 50 times on youtube or in commercial TV. Many gamers do even avoid platforms as twitch or tiktok, and can't be reached by avldvertising via this platforms.

I do like demos, I've bought a few games from them. I bought Factorio years and years ago because of that. I liked the Next Fest on Steam and have wishlisted a few games for when they leave Early Access. I don't buy ea games (or EA games, lol). The most recent demo game that got me was dotAGE. It's slightly in the vein of other settler/logistics games but it's quirk is that you unlock more options for the next game by losing, a la rogue-likes. Also has random events.

Demos work well for me, because I like games based on their minor details. UI/UX is important to me, so the original Dwarf Fortress didn't work for me. I also like QOL features a lot, 90% of my mods are based on QOL shortcomings, so if a game is just awful then I'll avoid it. There were a few demos that I quit within 15 minutes because they were too unpolished. (I'm sure they'll be fine in time, but this was too early for them.)