The crux of the question isn't really about how people would react, but how governments would react. CrusherBrooks is right - by and large, people will go on about their lives, because they have to. There are still bills to pay, children to care for, jobs to be done. Governments, on the other hand, have the time (and the obligation) to deal with these things. So... what would they do? Get control of it, of course. Magic is power. There's going to be a mad scramble to get control of those mages (and, possibly, demons) by any means possible. Depending on the mages and their views, this could go a lot of ways - from widespread persecution to outright war to mages working for the government or private corporations. There's a series I'm reading right now - Shadow Ops, by Myke Cole - that deals with something very similar: people started coming up Latent (i.e., they present magical powers in one of a range of schools). Depending on the country, they're treated differently - the US drafts them into the armed forces; China employs them as public workers; the Arab world declares them outlaw; etc.
