“Are Demons Fallen Angels?”
Answer: When exactly God created angels is open for debate, but what is known for sure is that God created everything Good because God, in His holiness, cannot create something sinful. So when Satan, who was once the angel Lucifer, rebelled against God and fell from Heaven (Isaiah 14; Ezekiel 28), one third of the angelic host joined his insurrection (Revelation 12:3-4,9). There is no doubt these fallen angels are now known as the demons.
We know that hell was prepared for the devil and his angels, according to Matthew 25:41: “Then He will say to those on His left, ‘Depart from me, you who are cursed, into the eternal fire prepared for the devil and his angels.’” Jesus, by using the possessive word His makes it clear that these angels belong to Satan. Revelation 12:7-9 describes an end-times angelic battle between Michael and "His angels" and the devil and "his angels." From these and similar verses, it is clear that demons and fallen angels are synonymous.
Some reject the idea that the demons are the fallen angels due to the fact that Jude verse 6 declares the angels who sinned to be "bound with everlasting chains." However, it is clear that not all of the angels who sinned are "bound," as Satan is still free (1 Peter 5:8). Why would God imprison the rest of the fallen angels, but allow the leader of the rebellion to remain free? It seems that Jude verse 6 is referring to God confining the fallen angels who rebelled in an additional way, likely the "sons of God" incident in Genesis chapter 6.
The most common alternate explanation for the origin of the demons is that when the Nephilim of Genesis 6 were destroyed in the Flood, their disembodied souls became the demons. While the Bible does not specifically say what happened to the souls of the Nephilim when they were killed, it is unlikely that God would destroy the Nephilim in the Flood only to allow their souls to cause even greater evil as the demons. The most biblically consistent explanation for the origin of the demons is that they are the fallen angels, the angels who rebelled against God with Satan.
Christianity
In Christianity, Satan is often seen as the leader of the fallen angels. The New Testament mentions Satan 36 times in 33 verses, and the Book of Revelation tells of "that ancient serpent, who is called the devil and Satan, the Deceiver of the whole world," being thrown down to the earth together with his angels. In Luke 10:18 Jesus says: "I saw Satan fall like lightning from heaven." While the New Testament thus mentions Satan falling from Heaven, it never says that he was an angel, only that he masquerades as one, in 2 Corinthians 11:14. However, the concept of fallen angels is not foreign to the New Testament; both 2 Peter 2:4 and Jude 1:6 refer to angels who have sinned against God and await punishment on Judgement Day.
Dragon and his angels ... Main article: War in Heaven
In the New Testament, Revelation 12:3–14 speaks of a great red dragon whose tail swept a third part of the stars of Heaven and cast them to the Earth. In verses 7–9, after defeat in a War in Heaven in which the dragon and his angels fought against Michael and his angels, "the great dragon was thrown down, that ancient serpent, who is called the devil and Satan, the Deceiver of the whole world - he was thrown down to the Earth, and his angels were thrown down with him."
How could Lucifer, an archangel, have rebelled against God?
Revelation 12:7-9 says Lucifer and his angels fought against God and were cast out of Heaven. Since Lucifer was a highly intelligent creature--not to mention the fact that he had an intimate knowledge of God--I can't comprehend how he (or any angel for that matter) could rebel against God. That seems to be utterly insane. What was the particular sin that Lucifer and the angels allied with him committed?
Answer
You're right in characterizing Lucifer's rebellion as an insane act. Don't forget that, although Lucifer had a superabundance of spiritual gifts, he was also endowed, as we are, with the gift of free will. God left him free to choose Good over evil, and, as we know, he chose evil.
Consider Adam and Eve. Before the Fall they possessed immortality, control over their passions and appetites, the complete integrity of their wills, as well as a human intelligence far superior to that which we have now. Yet, like Lucifer, they chose to commit a mortal sin. This means God allowed them to exercise their free will.
As for the particular sin the bad angels committed, many theologians believe that in their pre-fallen state the angels were given a foreknowledge of humans (who would be inferior to them), as well as a foreknowledge that God himself (the second Person of the Trinity) would be incarnated as a man and redeem the universe through his death on the cross.
This revelation angered Lucifer because it meant he and the other angels would have to worship God incarnate. Lucifer and the other angels who fell were so proud of being superior to men that their overweening arrogance wouldn't allow them to worship Jesus Christ the God-Man. This refusal--this non serviam--stemmed from pride. That, anyway, is the theologian's theory.
Revelation 12:7-9 describes an end-times angelic battle between Michael and "his angels" and the devil and "his angels." From these and similar verses, it is clear that demons and fallen angels are synonymous.
