A demo disc is, as the name implys, a disc with several demo's of games on it. Demo's come in two types, playable demos and non playable demos. Playable demos usually allow players to play one level of the game (typically the first) while non playable demos usually feature a montage of clips from the game, most demo discs include both types of demos. Demo Discs are often distributed with certain gaming magazines or bundled with consoles. Sometimes companys sell demo discs to consumers at a low price (typicly under ten dollars, or in some cases under five).
Xbox Magazine often feature multiple demos on a disc, such as Ninja Gaiden. Even Nintendo issues demo discs for games such as Viewtiful Joe and Metroid Prime 2: Echoes for registering products with them.