Games like Sleep Demon
Games like Sleep Demon include Layers of Fear (2016), ROUTINE, Poppy Playtime, Outlast, and From The Darkness. We matched them by the tags players give Sleep Demon on Steam (Psychological Horror, Demons, Dark, Adventure, and Singleplayer): closest matches first, and among equally close ones the better-known games.

Layers of Fear (2016)
Shared: Psychological Horror · Singleplayer · Walking Simulator

ROUTINE
Shared: Psychological Horror · Singleplayer · Dark

Poppy Playtime
Shared: Singleplayer · Psychological Horror · Dark

Outlast
Shared: Psychological Horror · Singleplayer · First-Person

From The Darkness
Shared: Psychological Horror · Dark · Walking Simulator

Blair Witch
Shared: Psychological Horror · Adventure · Dark

Bad Parenting 1: Mr. Red Face
Shared: Psychological Horror · Adventure · Dark

What Remains of Edith Finch
Shared: Walking Simulator · Adventure · Singleplayer

Visage
Shared: Psychological Horror · Dark · Singleplayer

Garten of Banban
Shared: Psychological Horror · Singleplayer · Dark

Buckshot Roulette
Shared: Dark · Singleplayer · Psychological Horror

Still Wakes the Deep
Shared: Psychological Horror · Dark · Walking Simulator

Little Nightmares II
Shared: Adventure · Dark · Singleplayer

MiSide
Shared: Psychological Horror · Singleplayer · First-Person

Platform 8
Shared: Psychological Horror · Adventure · Walking Simulator

Sally Face - Episode One
Shared: Psychological Horror · Dark · Adventure

Fingerbones
Shared: Psychological Horror · Adventure · Dark

Phasmophobia
Shared: Psychological Horror · Dark · Demons

Slender: The Arrival
Shared: Psychological Horror · Dark · Singleplayer

Garten of Banban 2
Shared: Psychological Horror · Singleplayer · Dark

POOLS
Shared: Psychological Horror · Walking Simulator · Singleplayer

Outlast 2
Shared: Psychological Horror · Dark · Singleplayer

Little Nightmares
Shared: Adventure · Singleplayer · Dark

Firewatch
Shared: Adventure · Walking Simulator · Singleplayer