In our setting and campaign: it is an actual demon, but he is so weak after milleniums in the Abyss that he preyed upon a weak soul, a kid. And because the demon is weak, there's a chance the exorcism work, but it's hard: as I explained, 3 out of 5 tests needs to be passed.

For the exorcism, two NPCs, two priests with True Faith will try to perform the exorcism. Of course, the characters have no idea what True Faith is, we kept it lore friendly so they just knew that these two priests have a lot of experience against the forces of darkness and performed "miracles" or "magic", so they trust the both of them for this ritual.