They have all answered this well. A Seller demand, normally referred to as 'Notice of buyer to perform' is a written notification to execute the contract as it is agreed. This notice sets a timeframe under which the buyer is to perform (as they hadn't met the already agreed upon dates in the contract) At the end of 48 hours after receiving this notice, the seller has the right to cancel the contract and go to another buyer. While they can have the right to damages,...good luck proving a financial damage in a court. Rather, they may keep the earnest money deposit, but they were entitled to that anyway, if you'd released contingencies after your 17 days of due diligence ( or whatever timeframe was defined in your contract, 17 days is the default number of days).
Most often, it's a method to get someone to get serious and abide by the terms of the contract. The seller has the RIGHT to cancel but may or may not execute that right. If you are buying a bank owned home, they could go with a back up offer, but that would mean an additional 17 days of contingency etc. (Other sellers in this market may not have a buyer in back up position ready but could....)
Best bet? Get moving and get that escrow closed now.