I will not be using spoiler tags; if you don't know what the lowest layer of Hidden Fun Stuff is, you may wish to wander away now. If you've not heard the phrase "horrifying screams," you've not truly encountered HFS.
It's an academic question, but one I enjoy pursuing. Are populations of Demons infinitely spawning, or "merely" in the billions? Well, dwarfkind is screwed either way, but it's fun to experiment, and good information for modders or the most dementedly devoted DF players may result. I will be editing this post, both to report on progress and add new experiments I think up.
The best way to measure demonic numbers is to lower them until they are no longer "unnumbered." Obviosuly, dwarvern axes will not suffice for this task, nor will magma. But I do have an experiment plan that may just work.
Step 1: Success, sort of
Attempt to inject a custom demon. I will extract a demon from a .dat, one which carries the [UNIQUE_DEMON] tag so that it goes up into the overworld, making it easier to detect, and place it in a raw, changing only its name and its identifier. If this quasi-demon is accepted into the world, I will be able to modify it. This is essential. The demon will not be in any way different from any other demon, save for its unique name and identifier, and the fact that it is contained in the raws, not the .dats.
Results: Well, the aforementioned plan failed. But I managed to make a giant bat clone appear in Hell instead; it was supposed to lay the groundwork for Extra 1, but its purpose has just been rather significantly expanded. So I achieved my goal. I put a creature in Hell. Just not the one I'd planned to.
Step 2: Significant error in basic experimental procedure.
Set the demon to go extinct during world gen. I will first remove any and all tags that would allow the demon to reproduce; no [MALE] or [FEMALE] tags whatsoever, and then give it a max age of five, and see that the demon disappears or is described as having zero population. If the numbers remain "unnumbered," this will be very, very strong evidence that demon populations are not tracked, but spawned indefinitely. As a control, I will also set a group with no [MALE] or [FEMALE] tags and a max age of 3000; if both groups disappear, removing gender and adding age will prove to be the culprit of demonic elimination.
Step 3: Significant error in basic experimental procedure.
Pierce hell in a world where demons should be extinct by maximum ages and inability to breed. There are several possibilities, depending on what is seen and reports coming from step 2. The first is that test demon populations are listed as unnumbered, but none show up; I will dig into various sites in a pocket world until I have a sufficiently large sample. This will mean that demons are described as "unnumbered" regardless of their populations, which makes the possibility of annihilating suddenly very real. The second is that they are listed as "unnumbered" and DO show up. This will, conclusively I believe, prove that demon populations are infinitely spawned. The third is that the test demon population is listed as zero, but test demons are spawned anyways; this will prove that although demonic populations are tracked, ex nihlo spawning is used as well. The fourth is that test demon populations are reported as zero, and none show up. I personally expect this the most; it will prove ex nihlo spawning is not used, and it will lead to Step 4 as a last test.
Step 4: Significant error in basic experimental procedure.
If step 3 conclusively demonstrates accurately measurable, finite populations and no ex nihlo spawning, set the max age to reduce the demonic population as severely as possible, without causing them to go extinct outright before worldgen's end. This should give us a better idea of the scale of Hell's legions. If I can reduce the numbers to a reportable amount, we should be able to calculate the initial population by making some educated guesses as to how maxage works.
Extra 1: Side project
Attempt to get some form of plant to grow in Hell. I think I should make brewing it result in the Most Valuable Beer In The World, or, if it's a tree, make its wood the Most Valuable Wood In The World. This may require me to turn Slade into a form of soil, which could make it mutually exclusive with Extra 2.
Extra 2: Side project
Replace slade with something actually useful, such as an ore for a heavier, more awesome version of Adamantine, and see if it can be mined, used, and processed.
Extra 3: Side project
Attempt to make an anti-demonic poison. Demonic IDs are all in the form DEMON_# (DEMON_1, DEMON_2, DEMON_14, et cetera) so, as long as we make affected creatures be DEMON_1 through DEMON_X, where X is a reasonable stopping number for unmodded DF, we should be able to make an anti-demonic chemical weapon. I gather there has been progress in making poison weapons elsewhere; success here could result in Dwarves becoming very, very Fun from the perspective of Hell. If Extra 1 is successful, we could make the plant itself grow exclusively in Hell, make things more interesting.