It's a known bug. What happens is that for the first couple points, it actually does decrease damage, but when it goes into the negatives, it starts going back up again, because all damage is positive values and there is no lower limit when the math is calculated. So the farther the damage is decreased, the more it's increased, because the value is always made into a positive number.
If you're familiar with the phrases "signed integer" and "unsigned integer," you might have a good idea of what's going on, here. In the simplest sense, all positive values are positive and all negative values are positive when doing the final damage calculation.
Best way to avoid it for now is to not increase Con and increase your HP instead.
As for being a demo, it kinda-sorta is. The game has a beginning and an end, along with everything being obtainable. So in a sense, it's a "complete demo," but not a "complete game." You simply can't go to any other areas beyond what's already there because they don't exist yet, despite having a fully playable "demo."
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