Alicornutopia

It's probably been done, sure.

Come to think of it, if a magical plant is a known thing that exists, why does Cam react to magical objects several times with "well normally demons can't make magic items but maybe it works if you have something to copy?"

I assume he just does not know all the relevant Fairyland details.

Yeah, Cam pays less attention to Fairyland and Heaven than he does to the mortal world and Hell and Limbo. It's probably still not a good way for me to have him put it, though, he has had a hundred fifty years to hear about it. He still wouldn't know if it applied to other magic systems though.

Does glowy cloud fluff count as magical?

It is Technically Not Magic, I just have no explanation for it.

So a demon who wanted to could conjure some cloud fluff, for example if they were working with an angel or if they wanted something that glowed forever or if they just liked the aesthetic? Maybe they could make their own cloud planet in hell?

Sure.

How does the appearance of new demons work?
To they tend to appear near other demons?
Could a demon be stuck in the middle of nothing since they wouldn't have the knowledge to make a spaceship?

How far out do the demons go? Could there be other civilizations of demons in the void that are far enough away that the groups haven't touched? Or is there an outer limit where demons have expanded from a central point?

Demons tend to appear near other demons, but not necessarily very near. But they can get around by making air and using it to fly even if they land in vacuum.

Canonically demons have actually expanded from a central point; there are hermit demons way far away and demon-inhabited planets less way far away for a ways around the plane of gold. If you wish to say that another "mortal world" is using the same afterlife set, "they just appear SUPER far away in a different cluster" will totally serve as an explanation because all the afterlives are spatially infinite.