if you're not demoing for them, who are you demoing for? Your mom?
That's true but I think his point still stands. It doesn't really matter who, if it isn't for internal use then you want it to sound amazing. Long gone are the days when anyone accepted anything short of album quality.Well without sounding like an asshole here, it could be a number of possibilities.
It could be for putting together a few songs to distribute between local venues to try and secure some gig spots, or it could be do distribute between all of their friends and family, or yes it could be for labels also.