An oft-repeated Jewish esoteric tale of the first man, Adam, is that he separated from Eve after the death of Abel and the exile of Cain [trial separations are not a modern invention - happened to Abraham and Sarah also - see Gen. 22-23]. It was during this time that succubi came to him, seduced him in his sleep, and through him fathered demon and changeling children.
Here is one spiffy account (there are many versions of this folk tradition) from Midrash Akbir that reads like an infernal version on the list of generations found in Gen. chapter 5 and then goes on to tell of the rise and fall of Adam's demon children:
When the First Man saw that death had come upon him by the hand of Cain...he separated from the Woman and slept alone, so that a lilit that was named Piznai found him and aroused his lust with her beauty....and she bore him djinns and lilin . She bore him 92 thousand multitudes of djinns and lilin, and the first born [changling or demonoid child] of the First Man was named Agrimas. So Agrimas went and took the lilit Amarit ; she bore to him 92 thousand multitudes of djinns and lilins, and the first born of Agrimas was named Avalmas. He went and took the lilit Gofrit, and she bore for him 88 thousand multitudes of djinns and lilin. The first born of Avalmas, his name was Akrimas. He went and took Afizana daughter of Piznai (an older woman?)and...[eventually] The Holy Blessed One gave over the Wicked Ones to Methuselah the righteous, who wrote the explicit name of God upon his sword and slew 900,000 in a single moment, until Agrimas, the first born of the First Man, came to him. So he stood before Methuselah and he appealed to him to receive him . And he (Agrimas) wrote and gave to him the names of the djinns and lilin  and [in turn] they (the sheidim) gave them (humans) iron to restrain [spirits] and they gave their letters in protection , so the remnant (the surviving spirits) concealed themselves in the remotest mountains and in the depths of the ocean (Margoliot, Malachei Elyon 204, translation is mine).
Sounds like the inspiration for the backstory for the plot of Hellboy II, doesn't it? Wondrous swords have appeared in Jewish tales from the moment the Cherubs got their first one in Chapter 3 of Genesis. As to why the antediluvian Methuselah might spare a clan of demons, I would suggest the following. First, there seems to be the implication that at least some of these creatures were quasi-human (and kin, to boot). And the second may be that the author thinks of sheidim more in the vein of the djinn than as demons; mischievous elemental spirits more than malignant embodiments of radical evil. Many Jewish sources about sheidim describe them in a way that is analogous to Arabic accounts of the djinn: Sheidim acknowledge God's authority, they study Torah, and even observe Jewish law. They often bring misfortune, but those wise in their ways can also get them to serve good ends.
 I translate the Hebrew word sheid as "djinn," rather than the more conventional "demon." See the concluding discussion above. Also take a look at the useful article, "Genie", on Wikipedia.
 Here lilit and lilin [plural] has the connotation of a succubus, a female spirit that sexually molests men in their sleep (female djinns, known as jinniyah, are also notorious for being sexual interlopers). In other sources, the same term lilit refers to malicious spirits of both sexes who cause illness and misfortune.
 I am struck by the fact that the names of the female evil spirits for these two generations all end in the -rit structure. This makes me immediately think of those djinns known in Arabic as the If-rit. Why the males' names all end in -mas has no obvious association or meaning for me.
 I assume his appeal was based on either his status as a son of Adam, and/or on some notion of kinship to Methuselah. It has the feel of a Middle-Eastern claim to clan loyalty, otherwise I don't see Methuselah's motivation to spare him and the rest of his spirit family. In any case, what follows are the terms of capitulation to humanity that allows Adam's impish offspring to get away with their lives.
 The names are important because knowing the names of spirits gives one authority over them. With the list, people can now control the spirits and curb their harmful activities [SEE The Testament of Solomon]
 Iron has anti-demonic properties, so I think this is meant to provide an explanation for how mankind first acquired the the knowledge of iron smelting (presumably Methuselah's sword was bronze). In I Enoch it is claimed that fallen angels taught humanity everything from sorcery to iron fabrication to perfumery. Letters and words also have constructive power, so revealing either their alphabet or - more likely - their magical/angelic symbols [which became a staple of medieval amulets], now gives humanity an added countermeasure against the djinni and succubi.