The older Sinclair reflects on his childhood and on the influences from the world of darkness that "tore" him from his innocence and his parents. He observes that learning how to navigate the newfound sexual desires of his adolescence and how to balance those against the values of his upbringing proved a miserably difficult task at which he failed.
A few years had passed, during which Sinclair had only peripheral contact with Demian. Then, as Sinclair began to take classes toward his Confirmation, he learned that Demian would be taking them with him. When these classes started, Sinclair purposely avoided Demian—he still felt awkwardly indebted to Demian because of his help in freeing Sinclair from Kromer years earlier.
As Sinclair became less interested in his conversation, he became more and more intrigued by Demian. He still felt a bond with him from years past. One day the pastor taught the story of Cain and Abel. When he began to speak of Cain's mark, Demian and Sinclair looked at each other knowingly across the room—what the pastor was teaching need not be the final word on the story, they thought. This moment drew Sinclair and Demian back together. Soon after, Demian switched his place and was sitting next to Sinclair.
Sinclair finally began to enjoy confirmation class. A glance from Demian at a point during the lesson could get him to question what the teacher said. Further, he watched Demian play all sorts of psychological games with the students and the teacher. Demian seemed to exert a remarkable power over others' actions. Sinclair questions him about the way in which he seems to be a puppet master over others. Demian responds that by concentrating hard enough he can learn to read people's thoughts. Further, if one wills something enough, and it is possible, he will accomplish it. Demian uses these two principles to explain how he moved his seat next to Sinclair's and how he is able to affect what the teacher does by staring at him.
Sinclair's religious faith begins to wane. However, unlike classmates who completely denied the truth of all Christianity, he respected the value of a religiously observant life. Rather than reject the bible and Christian belief entirely, Sinclair took to offering different, perhaps more fanciful, interpretations. One day after a class in which they had discussed the crucifixion, Demian offers Sinclair a radical suggestion. Sinclair feels the need to reject Demian's suggestion as too radical—something must be held sacred. But, Demian pushes on—the God of the Bible may represents all that is good and honorable, but, he insists, there is more to man. One must either also worship the devil or worship a god who embodies both good and evil.
Sinclair is elated that Demian has touched upon his deepest thoughts about there being two realms. He tries to bring it up, but Demian brings the conversation to an abrupt halt, telling him that he does not yet understand the full significance of what he is saying.
As confirmation approaches, Sinclair and Demian drift apart. Confirmation day comes and Sinclair learns that after vacation he will be sent to a boarding school.
Rather than telling stories at the beginning of this chapter, Sinclair makes some general comments about life and growing up. Additionally, he encapsulates the years of his life in between episodes. This little interlude allows the author to indicate the passage of time without deviating from the central thrust of the story—Sinclair's personal development. Further, this extended passage reminds the viewer of an important point about the perspective of the novel—all the stories being told are filtered through someone who is not an omniscient narrator. The older Sinclair does not know the inner thoughts of the characters. Sinclair is certainly telling the stories differently now than he would have at the time they occurred.
The view of Demian presented in this chapter is, as before, one of awe and admiration. Demian is presented toying with other people psychologically, having an almost superhuman degree of understanding and ability. Sinclair is still very impressionable and willing to follow whatever Demian tells him. This informs the view we get of Demian from this time. As the book progresses, we will see that as Sinclair becomes more independent, he ceases to elevate Demian to divine status.
Demian's suggestion that it is preferable to worship a god of both good and evil foreshadows Sinclair's later infatuation with Abraxas, a long forgotten creature of ancient times who is conceived of as such a god by those who worship him. Further, this raises for Sinclair again his thoughts about the two realms. In arguing to Demian that certain things are forbidden and that "we must renounce them," Demian reveals that he is still caught between the two worlds. He has not learned to think himself entirely beyond the notion of evil. His will has not fully developed and he has not transcended common conceptions of evil, to think entirely for himself. He has not yet realized that his will can be far more powerful than mere moral edicts. This is why Demian cuts him off and tells him that he does not yet understand the full implications of what he is saying. He is right to see that both worlds, the realms of good and evil, are necessary and important. Yet, he has not realized the full force of this idea—that ultimately, it can free him from ever calling something absolutely forbidden.
In the very last paragraph of this chapter, we see how significant a transformation Sinclair has undergone to date. Though he talks of his mother doting on him, he says that "Demian was away on a trip. I was alone." Demian has replaced his mother as the central figure in his life. Metaphorically, since Demian represents the world of Darkness and his parents represent the world of light, this paragraph portrays Sinclair as having moved from the world of his parents, to the world of Demian, from the "good" and noble toward the "evil" and irreverent realm.