This would be a wall of texts but bear with me here. In my opinion, the reason why the Hero before his death and all the lower class people of the Kingdom didn't realize all the heinous acts is quite simple actually. It's because the Demon Lord exist. The upperclass of the Kingdom uses the Demon Lord and the demon race as the scapegoat for all the heinous acts they did. Even the general said the Hero's village was attacked by the demon army when we saw the truth that it was the general himself that slaughtered the villagers and killed the Hero's mother. This same premise occurs in Maouyuu Maou Yuusha as well where Maou said the ministers of the human nations would place the blame of their corrupt actions as "demon possession". Whether the Demon Lord of this world is actually evil or merely protecting the interest of his/her people is something we'll have to see. It does makes me wonder though why the Goddess and the other Gods wants to save the human in the first place? She was shocked when Raul was betrayed and killed and said the Gods will aid the humans no longer. Does the Gods and Goddesses of this world not have omniscience I wonder?