DemoApp is that mystery application that coexists in the iPhone's Applications folder along with all the standard apps like Google Maps, Calculator, Stocks, and so forth. We've known for a while that it had something to do with movies but until today, we weren't sure what it did. Today, I can confirm that it does what most people have suspected: it plays a single movie over and over in a repeat loop. It does not, as others hoped, allow you to play video out through your dock. Here's the down and dirty on DemoApp.
Where is DemoApp located? It's found in /Applications. You will not be able to see this application without hacking your iPhone.
How do I make my iPhone automatically play a movie? Place an h.264-encoded movie named Demo.mov into /private/var/root. Reboot your iPhone. (Power down and then re-power on.) The iPhone automatically opens your movie and begins playing it on a loop.
How do I make it stop? Remove the movie from /private/var/root and reboot.
While playing, will it export video out my dock? No. Just audio.
Why does it play in portrait mode? Presumably so it can remain docked and powered.
Does it have to be encoded in h.264? That's the only encoding I've tried.
Does it have to be named Demo.mov? Yes.
How did you figure this out? Testing and playing with the Unix strings command and, frankly, quite by accident.
How do I make DemoApp appear with my other Widgets? You can do this but it's really kind of pointless. You must edit /System/Library/CoreServices/SpringBoard.app/DisplayOrder.plist. Copy the file to your Mac, make a copy, and use Property List editor to move the com.apple.DemoApp dict pair from special into iconList. Return the edited version to the iPhone and reboot. To hide the widget, just restore the original DisplayOrder.plist.