Basic questions about playing the demo

I think these questions would be answered in the documentation that comes when purchasing the game. This looks like a game I will purchase, however I'm going to wait a bit and learn as many of the basics off the demo as I can.

When I'm starting a game with the demo, how is the game difficulty set? I can see that most game options are not available in the demo, but I can't seem to find anything at all, available or not, that indicates game difficulty.

I see it's possible to set up empires in the game, and designate them as AI controlled. If I don't set up any at all, does that mean that there will only be neutral players in the game?

Can the demo run mods? It appears that it won't run the balance mod; did I just not set it up properly?

Thanks. I'm sure I'll have more questions as I progress into the game...