the way that the hysteria spreads through the village simply by people spreading rumours about the "Japanese" man who moved to the neighborhood. to the point it grows into a rabid fear or obsession. the fact the Shaman was ALSO an outsider on the edge of town...a Red Herring even

the cop dads inability to believe HE could have sinned first that drives him to run home before the third crow of the rooster...

The entire situation is not so much about a plague of hysteria afflicting a village as it is about the singular cop dad's lack of faith & how that leads him to swallow the bait & fall directly into a trap laid by the Devil. Every piece of the film is a piece of that trap.

So is the Demon actually the Japanese Stranger? Yes, but it's also the Shaman, it's also the Nameless Woman in White.
They're all different faces of the demon essential to damning the cop dad & his family. He's the one who really swallowed the hook, not the daughter.