In many sects of ancient and modern gnosticism, the Demiurge is the "false God" of the world, who created the flawed and pain-filled universe as an act of arrogance. He fucked it up, projecting his own pain and lust for power on to his creation, and ended up with Black Iron Prison of a world we live in now. In particularly cabbalistic Judaic flavors of gnosticism, and later esoteric traditions which borrowed from the always-fashionable cabbala, the Demiurge created the universe from the qlippoth, or false sephira.

In many Christian and Judaic gnostic traditions, the Demiurge is identified with the jealous, smite-happy Old Testament God, particularly in his named aspect as Al-Shaddai1, or "God of Battles". In this reading, shared by many modern freethinkers of various stripes, the various bolts of fire from the heavens and dismembering children with bears that God seemed to revel in was obvious evidence that the lord of the world was hardly a benevolent or loving one.

The Demiurge was usually opposed in this theology with Sophia, a higher divine principle which was feminine where the Demiurge was masculine, and was omnibenevolent, seeking to break in through the edges of our imperfect creation to spread unconditional love and help us escape. The moment of gnosis, then was the moment of personal contact with the Sophia (n.b., both have the same radical meaning, wisdom). In Christian gnosticism, Christ was usually seen as an emanation of Sophia, sent to help humanity escape from the Demiurge and his prison of a world.

1 Geez tells me that Al-Shaddai should really be romanized to El-Shaddai, and actually means "Guardian of the Gates of Israel", not "God of Battles". I've certainly seen it written and explained the way I use a number of times, but sources in matters like these tend to be both slipshod and agenda-pushing. I'd like to do more research on this, but until I do, assume that Geez is probably right.