Let's say I am demonstrating to a person "how to flip a chair" by flipping a chair for him. What is the person who is being demonstrated to called?
That person would be called observer.
What is observer? Well, a person who watches or notices something.
Audience could also work in some contexts, especially if you are doing something to delight or entertain others.
E.g. David's card tricks were a hit at the party, because his audience was willing to go along with his silly antics.
If it's a demonstration, the viewer could be the -- viewer.
How about a viewer or a spectator?
A student, if the purpose is to teach.
One important word not mentioned here yet is witness. the person you demonstrate to would witness you "flipping a chair for him". witness also refers to someone who testifies in court for what they have witnessed.
I would use the term that fits the role or relationship. Are they there to learn or to evaluate? Or is the demonstration more of a dog and pony show intended for a general audience. Or are you accosting people on the street hawking your toy robots?
If you were just looking at the mechanics of demonstrations, I'd probably use recipients, audience, or participants in apposition to demonstrator.
There is the perfectly good word demonstratee ... it's not common but it is part of the English language. Given it's logical connection to demonstrator the meaning should be apparent to people who don't know it and it ties in to your view that you are demonstrating (as opposed to showing or teaching...).
Tutee may be an appropriate description, if the demonstrator can fairly be described as a tutor.
The term neophyte may apply depending on the context. Oxford dictionaries has:
A person who is new to a subject, skill, or belief:
four-day cooking classes are offered to neophytes and experts
In many education contexts these days, the word learner is used.
monitor, onlooker, inspector, receiver/recipient, beholder, examiner .....
The wealth of possible terms offered emphasizes the value of Phil Sweet's advice of April 25: each of the candidate terms has nuanced meaning that fits its context; select the one that best fits the role or relationship you are describing