A demand is a preference with an emotional charge. If I want a fiorentina pizza but they have only a four seasons, and I'm fine with the four seasons, it's a preference. If I'm upset, it's a demand.
Why we drop demands is covered elsewhere. In brief, they're the set-up for resentment and fear.
How do you drop demands (in the sense of a preference with an emotional charge)?
Unreal demands are easy to see through. Wishing the moon were full of cheese or the walls were full of gold is clearly lunatic. There are many things that are wished for that simply are not so.
Unreasonable demands are relatively easy to see through. Wishing for a life of unending leisure is unrealistic and morally dubious, and unending leisure will in any case fail to yield happiness.
'Reasonable' demands are harder.
Let's take one:
For example, my client should pay on time. This is incontrovertibly true. We have a contract, and that is what the client should do.
However, just because the client should pay on time does not mean he will. Legally, we can require him to pay on time. Psychologically, demanding him to is unrealistic. Some people just will not. That's a fact. It's more realistic, therefore, to say that we prefer people to pay on time but recognise that they will not always do so.
This does not mean that we do not take action to bring about timely payment (being careful who we contract with, negotiating and drawing up a contract, sending an invoice on time, sending a reminder on time, suing if necessary). But none of that requires emotional involvement. Setting terms, boundaries, etc. can be done with complete emotional neutrality.
We prefer the client to pay on time, but this preference is not furnished with an emotional charge which results in us being upset if he does not. The preference is also not furnished with an expectation that the preference will be met, so that, if it is not, we are not surprised. To summarise, a preference is a neutral recognition that things might be better a particular way, but without an emotional charge attached to whether they are, and without the unquestioning assumption they will be that way.
When are preferences legitimate?
Some preferences concern doing God's will effectively, efficiently, and harmoniously. These are always legitimate. E.g. we prefer the sponsee to be cooperative, the boss to give clear instructions, the colleague to be pleasant.
Some preferences are personal matters of taste. E.g. fiorentina pizzas.
Some preferences are personal matters of temperament. E.g. being super organised or being super flexible.
Some preferences concern comfort and thrills. E.g. having a nice sofa or bungee-jumping.
Some preferences concern keeping ourselves healthy. E.g. enough sleep, healthy food.
The preferences to be cautious about are those chiefly focused on ego goals: sex, money, power, prestige, and appearance. These easily convert to demands, tend to be addictive, and contribute little to profound happiness.
I have found it is best to treat these latter categories as bonuses dispensed by the Higher Power at the Higher Power's pleasure. It's safe to let them go, as they'll be delivered in some measure as a result of right living.
To sum up:
Drop ego demands.
It's OK to have legitimate preferences.
It's OK to take action to bring about their attainment.