A Demo is usually a single level, or part of a level, that should demonstrate what the game will be like.
Game Developers mostly release these demos a few weeks before the full game is released. A demo serves as promotion for the developer and the PC gamer can find out, if his/her hardware is compatible.
Here's a (partial) list of the Tomb Raider Levels, that served as demo:
- Library Demo (not found in the actual game)
You can find a walkthrough here: http://www.tombraidergirl.com/tr7/demo.php