Demand is the measure of the amount of a commodity a population wants and is able to purchase.
The ability of a population to purchase a commodity is determined by two things: The amount of income they are able to spend on said goods, which is determined by GDP/c and taxation, and the cost of the good itself, which is influenced by the amount spend on the efficiency and the extent of its Domestic markup.
During scenario design, per person demand for goods can be adjusted both for the overall scenario and for the individual regions.
In the Player Configuration file there are two places to do this. To change the demand for a product for all regions use the value wmprodperperson[X]; where X = the product's number (zero for agri, one for ore, etc). If this value = 1 then any region who's GDP/c = wmgdpc; from the configuration file will demand 1 unit per person daily. If they have a higher GDP/c they will demand more and if it is lower they will demand less on a sliding scale.
The second place is in the section that shows production efficiency and opening stock values. The value for demandppmod[X]; can be from 0.00 to 1.00 and makes the demand for the given region a percentage of overall demand equal to the value given. Using the above example, if a region has 0.5 for this value then they would demand 1/2 a unit per person daily. This value is not always used since it defaults to 1.00 if not added. It can be seen in the configuration file for the world scenario. An example of where this would be useful is in places like the mideast where timber is in much lower demand since alternate materials are used for construction. If you have two regions in a sceanrio that have very different demands this value can make it easier to balance them.
I've included this to try and provide a better understanding of how the game mechanics work but I should mention that the second value that allows adjusting per region demand was added very late in the development so is not widely used. We would have needed perhaps six months to review all the scearnios, know what percentage they each needed and rebalance them. Overall the delay would have had so little effect on gameplay it was considered unimportant. However, anyone designing their own scenarios may wish to use this values and if someone wishes to update existing scenarios this is something they could play with.