# not eating bread or drinking wine

This could mean 1) that John did not eat expensive food or 2) that John fasted often. John also did not drink wine.

# they say, 'He has a demon.'

"they say that he has a demon." 

# they say

The word “they” refers to the people of that generation, and most specifically to the Pharisees and religious leaders. Alternate translation: “people say”