Although resembling the traditional Devil of English folklore, The Dæmons are actually an ancient race of powerful aliens who set up a series of scientific experiments throughout the cosmos.
One of these experements was in fact on the planet Earth. The Master, using ancient psionic energy awakened the sleeping Dæmon Azal. When he showed Azal what the Earth was like, Azal declared the experiment a failure.
Deciding that destroying the experiment (Earth) would be too wasteful of his deminishing energies, Azal agreed to hand over control to the Master. The Doctor intervened, begging Azal to leave the humans to better themselves. Azal conceded that the Earth had potential, but the illogical emotions of the Doctor's Assistant Jo Grant caused him to accidentally destroy himself with the same psionic power that he normally thrived on.