Discussion about the Stronghold faction.

Orcs also don't resemble demons much, but nevertheless, it's a fact. And I don't think gremlins originated from goblins.

First, they are similar. Let's say orcish warriors are something in between a demon and a swordsman, though a bit larger than the former and much larger than the latter.
Second, the description of gremlins in Heroes of Might and Magic V clearly states that mages created them as an alternative to the goblins that had fled. It is also added that they are a good alternative, as gremlins are significantly smarter.