My personal take on this subject
The demons are the Nephilim survivors of the Great Flood. Because they had a spirit component to their existence, they drowned and died a corporeal death but the spirit part of them lived on. At the time of their physical deaths there would have been adult Nephilim and child Nephilim around.
It's hard to imagine that the fallen angels, who were basically universe and planet builders, playing games with humans and scaring them - this behavior is much more likely to be Nephilim spirits or what are called demons. It would explain why they are obsessed with possessing people - so they can feel what it is like to be a human again.
I remember reading somewhere that angel-women procreation also produced females but the gestational time was much shorter for Nephilim males and these mothers-to-be were celebrated because they were wives of the gods. When the thoughts of men became bad all the time, and after the 120 year decree, the angels decided to create a new species of human to prove that humans were worthy of existence by copulating among themselves. Materialized male angels and materialized female angels produced offspring but these children were born retarded and could not comprehend their existence.