魔 can mean demon, but is also the first kanji in 魔法 (mahou) which means magic. 族 can mean things like clan, tribe or family, and is the second kanji in 家族 (kazoku), which means family.
Taking a shot in the dark here, but it seems almost like an intentional play on magic and family, which seems fitting. Looking up 魔族 in my dictionary suggests it means something like 'demonic race' or similar, but in example sentences it was also translated more generally as 'magical beings'.