"Accounts from Vizjerei mages tell of the Butcher, a creature constructed from the different parts of other demons. An arm from there. An eye from there. This was done for reasons beyond sadism. The Butcher gained the strength and power of the different demons that were a part of it. This makes the patchwork creatures extremely powerful, but also extremely bloodthirsty."— Adria(src)
The Butcher Demons are a type of demon.
"Blood magic is needed to bind the parts together. It is best to start with a heart or a head. Use stitches made from lacuni hair and wait one day between fusing each of the other body parts together."— Adria's notes on the (hypothetical?) creation of a Butcher Demon(src)
Many Butcher Demons exist within the Burning Hells. They are stitched together from the parts of other demons to combine their strengths, then given life through magic. As such, Butcher Demons see all living and unliving things as mere parts. Per their origins, Butcher Demons are incredibly powerful, but are also extremely bloodthirsty. The Vizjerei wrote that urges to tear, dismember, and consume constantly drove these demons to commit new acts of violence. Adria speculated as to whether this was a byproduct of their unique creation, or whether they simply enjoyed inflicting pain.
"The truth about the Butcher demon was more startling than I ever anticipated. Evidently, there are many of them within the Burning Hells, though they used to be solely under Diablo's command. The butchers are stitched together from the parts of other demons to combine their strengths, then given life through wicked magic."— Deckard Cain(src)
The existence of Butcher Demons became known to the Vizjerei at some point, or, rather, one specific one did. Rumors of this creature persisted throughout the years. Prior to the Darkening of Tristram, Adria heard rumors of demonologists trying to make similar creatures to the Butcher. She later developed a method to replicate the process using blood magic. The creature of myth was later revealed in the depths of the Tristram Cathedral, but was defeated by a trio of heroes. Deckard Cain later discovered that the creature was simply one of many Butcher Demons.