I love this excerpt from one of the most profound books I've ever read, Patrick Harpur's Daimonic Reality: Understanding Otherworld Encounters: A Field Guide to the Otherworld:
[Daimonic reality is] an intermediate world, or reality, between what we think of as the material world and what we have traditionally called the spiritual world. Daimonic reality is like the unconscious but daimonic reality came before the unconscious. The unconscious is a recent model of daimonic reality, which we've placed inside us. But, in fact, it is not inside us, any more than it is outside us . . . it was this in-between realm which C. G. Jung discovered and called the Collective Unconscious. At first he located it solely inside us but was later forced to recognize that it lay outside us as well. Reality, in other words, is always psychic, lying between us and the world, partly inside, partly outside; partly personal, partly impersonal; partly material, partly immaterial; and so on—a reality which is as ambiguous as the daimons who personify it . . . There's an inescapable psychological law formulated by Freud that whatever is repressed returns in another guise. This is as true of the daimons in the Soul of the World as it is of our unconscious complexes—those independent fragments of the psyche that Jung called "the little people"! The daimons always come back. There must be a reciprocal relationship between us and them for the health of our souls because, finally, our souls, our psyches, are themselves partly alien. And the aliens, part of us.
—Patrick Harpur, Daimonic Reality: Understanding Otherworld Encounters: A Field Guide to the Otherworld
Tip of the hat to Matt Cardin. I extracted the quote from his superb (and free!) ebook: A Course in Demonic Creativity: A Writer’s Guide to the Inner Genius, which I highly recommend to all artists and creative people.
EDIT: I was a little inattentive in my sourcing of the above excerpt. It's actually from a 1999 interview with Patrick Harpur that was reprinted at Automatic Kaos Foundation (no longer accessible online). My apologies.