Evil Demons have almost never appeared in this world. The ones who typically plagued the mortal realm were the lonely ghosts and vengeful spirits of the dead, or perhaps some Demons that had gained sentience by accident.
The City God's underhanded dealings included, but were not limited to, trading with the souls of the recently deceased and with vengeful spirits to obtain items that aided cultivation. He would also tame Demons through various methods, such as teaching them to devour the souls of the dead, eventually refining these Demons into Detained Spirits and taking them as his subordinates.
In fact, the first few manifestations Yang An eliminated before encountering the City God were Detained Spirits that the City God had refined using certain methods.
