Demon beasts were wild animals that gain intelligence and powers from absorbing qi.
Other races are presumably like people in that they actively have to cultivate to start their cultivation and then they could simply have other reasons for being different.
The type of qi that is cultivated was different from my memory. Han Li noted the martial artists had true qi that differed from his spiritual qi in the first 100 chapters and the effects differed.
Later, in the middle realms, the martial arts are shown to be an alternative cultivation path to spiritual cultivation. At certain points, body cultivation and martial arts techniques of high enough level can be complements to each other or considered the same family of abilities, despite being different types of qi.
It blocks 5 element type attacks pretty effectively, from what I remember. It was very useful in the and suppressed the related treasures. It should also have some use as a general attack/defense.