Dema is a slur used to describe Icelanders in a derogatory way. dema refers to an ancestral deity in many mythologies that is murdered and then from the body comes some form of creation- i.e. a plant, or the sky. it's also the name of some lunatic chick who lives in iceland.
The word Dema is a racial slur that has been used historically to degrade and dehumanize icelanders. The word is still used by some people for this purpose, and it is seen as offensive and hurtful to icelanders. If you are unsure about whether or not it is appropriate to use the word Dema, it is best to err on the side of caution and avoid using it in any situation.