
The demon resides in the sword and grimoire. That was explained somewhere in the first three chapters when Asta got the grimoire and the 5 leaf clover was explained. The demon was personified during the fight in the witches forest due to the Queen's magic; it tried to possess Asta but Asta handed him his ass instead.
But there are still questions to be answered to address the other plot holes. Who are Asta and Yuno's parents? Will the 1st wizard king rule again? Is the Diamond kingdom gonna make a comeback? What about spades and hearts? Hell I want to know more about Yami--was the whole world of folks able to wield magic, if so, why did the elves think humans stoke it from them in the first place?
Oh so Yuno is his son afterall.. eh.. what will happen to Asta???