A supply or demand zone is a band of price from which a sharp directional move once originated, drawn as a rectangle and treated as an area where price may react when it returns. A demand zone is the base a strong rally launched from; a supply zone is the base a strong decline launched from.
The reasoning, shared with order-block trading, is that a fast departure implies orders left unfilled at the origin — when price revisits, that latent interest is expected to push it away again. Zones are typically marked from the consolidation or the last opposite candle immediately before the impulsive move, and the “freshness” of an untested zone is considered to matter: the first retest is held to be higher quality than later ones.
Supply and demand zones overlap heavily with support/resistance and order blocks; the difference is mostly drawing convention. They are discretionary by nature — where exactly the zone’s edges sit and when it is “used up” vary by trader — so an honest test requires a fixed rule for both, not a feel.