Of course the basic idea of a demo reel is this: show off your cool work, land a cooler job. I wish it were as simple as throwing your work into a movie file, typing your name in the lower right hand corner and pressing submit. It's not. Like anything else dealing with art, you have to be mindful of how a demo reel is constructed and how one element interacts with another.
I've had to learn this the hard way.
Even though many employers will admit they only pay attention to the first :45 seconds of the reel, and that they mute the sound when watching them, you still have to create a two minute reel. It has to start AND end strong. Music should be included, it shouldn't be obnoxious, and it should say something about you as an artist. Are you fun, serious, abstract, contemporary. How does the first clip you decided to show relate the the one that follows it? How are your transitions? Do you have any? Should each major section be labeled (Effects shots, illustrations, fine arts), or should your work flow from one piece to another?
I've been putting together my reel and I've been faced with all of these questions and then some.