Good question.
1) The demo session is separate and optional. The last thing I want to do is make the angels, particularly the prospective ones, feel captive. But for some, it will whet their appetite.
2) It's an opportunity to get some non-TechStars companies in front of an interesting crowd of investors.
3) It might actually be interesting to some of the angels coming in from out of town who wouldn't otherwise have the opportunity to see these companies.
That said, I should make it clearer that the demo session is entirely optional.