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We can define demonstration as "a skilled performance of a task or technique showing precisely how it should and could be done on the job". It's a time old way of teaching, and one based on common sense. It's one area of teaching and learning where common sense, research and theory converge.
For many learning purposes, the terms demonstration and modeling are functionally equivalent, with demonstration being the more common sense term, while modeling is derived more from research in learning, primarily by Albert Bandura and Social Learning Theory. Other similar terms include vicarious learning, and observational learning.
The work of Bandura has shown that not only does observational learning affect skill acquisition, but that it affects the probabilities that already learned skills will be demonstrated or used in real life.