I don't think I will ever be using that option, but I can think of reasons to use. For example, when someone wants to try out a game, I always had to explain it to them first. I always say but RTFM, but that is to hard for many and I end up explaining anyway. With the demoplay that explaining would help, because you have visual aid.
But it is crap if you let it take over, because the game is to f***ing hard.Because I would have just as easily watched a movie. And the same I think counts for developers. If players play the game by simply using demoplay, then they could have just as well could have made a movie.