Demons is an allegory of the potentially catastrophic consequences of the political and moral nihilism that were becoming prevalent in Russia in the 1860s.

It’s a fictional town that descends into chaos as it becomes the focal point of an attempted revolution. The underlying allegorical context is about "demonic" forces that take possession of the town.

“Demons” in this sense refers not so much to individuals as to the ideas that possess them. For Dostoevsky, 'ideas' are living cultural forces that have the capacity to seduce and subordinate the individual consciousness, and the individual who has become alienated from his own concrete national traditions is particularly susceptible.

In late 1860s Russia there was an unusual level of political unrest caused by student groups influenced by liberal, socialist, and revolutionary ideas. Dostoevsky offers commentary on the relationship of the ideas of his own generation to those of the current generation.

Themes

Much of the plot develops out of the tension between belief and non-belief, and the words and actions of most of the characters seem to be intimately bound to the position they take up within this struggle.

Dostoevsky saw atheism as the root cause of Russia's deepening social problems.

In Demons the Russian man has lost his true national identity (inextricably linked, for Dostoevsky, with the Orthodox Christian faith) and tries to fill the void with ideas derived from Western modes of thought.

Dostoevsky saw Russia's growing suicide rate as a symptom of the decline of religious faith and the concomitant disintegration of social institutions like the family. Self-destruction as a result of atheism or loss of faith is a major theme in Demons.

There are four actual suicides described in the novel.

Demons as satire

Dostoevsky took great pains to derive the novel's characters and story from real people and real ideas of the time.

As prophecy

Since the Russian Revolution, many commentators have remarked on the prophetic nature of Demons. 

“One must be a great man indeed to be able to hold out even against common sense. Or else a fool.”

-Fyodor Dostoyevsky, Demons