Many commentators have noticed a similarity between the symptoms of demon possession described in the New Testament and certain recognized psychotic mental illnesses. Some have even said that there is no such thing as demon possession–that the Bible is simply passing along the superstitions of ancient peoples. If this is true, then this would mean that Jesus was mistaken or even delusional when he described demon possession.
I have a couple of problems with this criticism of Jesus and the Bible. First of all, when I consider the incredible deeds of Jesus, I am forced to take his word for it that demons do in fact exist. When Jesus was raised from the dead, when he raised Lazarus, gave sight to the blind, walked on water, fed 5000 men, plus their families and so forth, he proved beyond a doubt that he was who he claimed to be. If Jesus says that the man in the region of the Gerasenes was possessed by demons I believe him. Some believe that there is no spiritual world and that there are no angels or demons. Based on the authority of Jesus, I believe these people are wrong. Simply declaring that demon possession does not exist does not prove anything. Jesus, the Son of God–the one who was raised from the dead–he should know about demons.
Another reason I disagree with those who say demon possession described in the Bible is just a superstitious description of a mental illness is that the circumstances simply do not fit that of a recongnized psychological condition. The demons who left the man in the Gersenes entered a herd of pigs, causing them to rush into the Sea of Galilee. These are not the symptoms of any known mental illness. I will admit that there is one case in which what Jesus describes as demon possession DOES look like a known neurological problem. This is in Matthew 17:14-18. In this story, a boy had symptoms which are clearly at least similar to what we now call epilepsy. Perhaps the boy did have epilepsy. Nevertheless, Jesus said that he was possessed by a demon. When he drove out the demon, the boy’s illness was healed. I can certainly see why some say this was epilepsy, not demon possession. I cannot prove them wrong, but I choose to take Jesus’ word for it. The boy was possessed by a demon.
You ask a very good question. What was/is the meaning of demon possession? What are the theological implications of the fact that God will allow an evil spiritual being to take possession of a human being? The Bible does not give us a lot to go on. We know that there are "authorities… powers of this dark world… and… spiritual forces of evil in the heavenly realms." (Ephesians 6:11-12). Apparently, given what Jesus said, spiritual beings called demons have the ability to in some sense take over some sort of control of human beings. The boy showed signs of mental illness. The man in the Gerasenes became violent and completely out of control. The theological implications are that for some reason (perhaps because of their allowing Satan a part in their lives) people can become possessed by satanic forces. Jesus told a parable about a man from whom a demon had been driven out who did not fill his life with good things becoming possessed by still more demons.
Is demon possession still happening today? People in some contries will give you a very definite yes. I have heard testimony from people in a number of countries of demon possession. I cannot comment on this. I simply do not know if these are actual cases of demon possession. But what I can say is that we have it on the very best conceivable authority–that of Jesus Christ the Son of God that demon possession was definitely happening during the time of the New Testament.