Demo mode is simply set by passing in a command-line argument to the game - the exact same game files are used regardless of whether you have a premium account so the game itself doesn't even need to be modified, just the launcher (or even just using a batch file, as mod development tools do - yes, those allow you to play the full game for free as otherwise you'd be severely restricted in the ability to test things), and in singleplayer the only online connections the actual game makes are to download a skin and send snooper information (if enabled, which was only made mandatory in the latest version, so only since then can Mojang be sure to tell if a cracked copy if running).
In fact, older versions do not even recognize the "-demo" flag because they don't have the code to do so; Mojang certainly knows about this but probably figures that they are so old as to basically be demos themselves; very old versions, prior to the full release (1.0.0) don't even have official server files available:
Servers can be started with the --demo flag (this is technically what the launcher does). Everyone who joins the server sees the demo message.
If one tries to play a demo version before 1.3 from the launcher using a non-premium account, they can play the full version. This is because 1.3 is the version that added the demo mode to Minecraft, so earlier versions do not have the code necessary to recognize that they are in the demo.
_mode#Trivia
Thus, the main issue is not really the existence of cracked launchers, it is how easy it is to bypass the anti-piracy measures put in place, including the fact that any server can easily be "cracked" by setting online-mode to false (I believe this was intended to allow server admins into the server to troubleshoot issues, I couldn't actually find any official explanations for why such an exploit-enabling feature was added and/or not removed).
That said, Mojang has gone after cracked launchers/clients before:
-java-edition/discussion/2830309-hacked-clients-getting-copyright-striked-by-mojang
Although it may be due to the fact that they were distributing an entire working copy of the game ("modded version") and not just a "mod" (files that must be added to the vanilla game to work and ideally have as little of Mojang's code/assets as possible).