What does John 7:20 mean?

In the terminology of Jesus' day, telling someone they "had a demon" was the equivalent of saying, "you're crazy." The crowd, at this particular feast, was composed of people local to Jerusalem, as well as those who had arrived from remote regions. Some of those people would not have been as familiar with Jesus' clashes with Jerusalem's religious leaders. For this reason, when Jesus claims that some are seeking His death (John 7:19), a portion of the crowd brushes the claim off as nonsense.

Even so, some in the crowd know that Jerusalem's religious leaders desire exactly that: Jesus' death (John 5:18; 7:1; 7:25). This was one reason why gossip about Jesus was mostly kept private until His appearance mid-way through the feast (John 7:13). In fact, those more aware of the clashes between Jesus and Jewish leadership will begin to question whether the Scribes and Pharisees can, or want, to silence Jesus at all (John 7:25–26).