Understanding demographics is understanding what motivates somebody to do something. Whether it to be to buy the product that you're pitching, to read the book that you're promoting, to watch the TV show that your celebrity client is on. You need to know the demographics that are going to be interested in it and you need to pitch to them because those are the people that you're going to be the most successful with.
So understanding a demographics is understanding who they are and how to reach them. So for maybe a more senior campaign, you know that they like to listen to the radio so maybe your demographics will be targeting radio. If it's more of a teenage centered pitch, it would be social media, internet and those types of things.
So understanding your demographics is knowing who you're pitching to and how to get the message to them in the most effective way.