Alright so i'm going to guess, that after the demon king and hero died it caused a shortage of magical power. Not immediately but slowly without the demon king's power and guidance the other demons couldn't keep with humanity and decided to be sealed, reincarnated, or just hide among humans. All the weaker ones who didn't hid were killed or starved of magic power. After thousands of years no new demons can be made thanks to the magic power shortage on the flip side humans are absorbing less magic power from birth and became weaker. While demons on the other hand can be born from pure magic power in the environment. When the hero reincarnated and started to use magic this dumps magical power back into the environment and demons can use this to birth new demons or even possibly strengthen themselves while humans on the other hand are still stuck in mana shortage.