Funny thing is, I didn't even know about demos until late in the game and I was bouncing around BBSes since the early 1990s. So I think the first demo I actually ran was for OS/2 and that would have been in the mid-1990s. (I think that there were a whole 2 demos for OS/2.) I think, on the whole, the PC world was far too utilitarian and the technology changed far too quickly for demos to make a big splash. So that's my excuse, and I'm sticking by it.
Of course to understand the appeal of demos you really have to look at the Amiga demoscene. Now those were amazing. It was amazing because of what the hardware could do, and because of how much creative and technical talent went into figuring out what that hardware could do.