The fight between Demon Lord and Hero is repetitive cycle necessary for this "ant farm" to continue, but think it glitched out somehow as it took 300 years for next Demon Lord to "respawn".
Mao should read a book "Who is this God Person Anyway?" by Oolon Colluphid, it's a third installment but should provide necessary info ; )
Skeleton Puppet was firstly a very simple toy, lacking intelligence made by a Loli Demon Lord, then a Living China Government Demon Lord infused it with just a recording ability.
Seems like the last Demon Lord who probably was a vampire, actually cared about Fibenette the sub yandare in some way, sent her off before upcoming end, since demons nearby would be annihilated along with him. This also applied to Skeleton Puppet, turning it into stone.
Seems like that surveillance Demon Lord was up to something, found a glitch perhaps and foreseen Mao amnesia...
Looks like Mao is trying do the same as Vampire Demon Lord, keeping Nikka away from inevitable : (
Fibenette, you perv lol