How does demon reproduction work exactly? How did they develop this cokcoo bird-like ability to disguise their young as people? Was it intentional or just a result of ermosus incompetence?
Erasmos definitely didn't intend for this to happen. It was just the result of his inexperience with monster-forging. Very rarely do monsters turn out 100% the way a divine intended...they always seem to have some kind of flaw or unexpected result.
Adhene are considered the most "perfect" monsters on Gaia. Their only flaw is that they're child-sized, but in some cases this actually benefits them.
Drau are considered the second-most perfect monsters. Their main flaw is that they're blind in daylight, although cecaelia and dworfs have similar issues and there are easy ways to cope with it (sunglasses, for example...)
Anyway, a "flaw" may actually be a boon depending on who you ask. In the demons' case, the magical guise they wear as children benefits them a lot. In fact, I'm pretty sure they would have gone extinct already if it weren't for this "flaw" of theirs.