The simplest explanation is that it's people making programs for the sake of it, not for any practical purpose. And such people (as people do) tend to coagulat

The simplest explanation is that it's people making programs for the sake of it, not for any practical purpose. And such people (as people do) tend to coagulate into a community around that interest, sharing results and techniques and overall socializing! I'm from Brazil and wasn't even born yet at the time, but if you want to easily see a bit of what demos were, one of their "modern equivalents", so to speak, would be Shadertoy [1]. There are also videos of old demos, and I'm sure there are archives of the programs, but I haven't searched for them either.