A hanyō is a mixture of a human and a yōkai, either by birth or by unnatural means. There are two ways that a hanyō is born. One can be born of a yōkai and a human. The other way is when a human with an unfulfilled desire merges with many demons; Naraku was born in this fashion.
Many hanyō by birth show physical signs of their yōkai roots, though they usually have a primarily human appearance.
Due to this mixed nature, hanyō are often considered outcasts to both human and yōkai societies due to the natural mutual hate between both humans and demons. The humans see only half-demons as nothing but the same monsters full demons are, while full demons see them as an impure mockery to their demonic powers and thus consider them too weak to associate with. This disdain can lead unfair prejudice and even downright death threats. The only people of either races that are even capable of accepting or tolerating hanyō are close family members and/or friends most of the time, who are ostracized themselves for choosing to being close to a hanyō. Due to the unfair prejudice and hate half-demons receive on a daily basis, many of them sought to resolve their impurity by either becoming full demons to be stronger than their oppressors or full humans to be accepted by the peacefulness most humans live in. However some are just happy the way they are and accept their heritage without question such as Jinenji or eventually Inuyasha, for Kagome's sake.
While a hanyō can never be as strong as the demonic parent without becoming a full yōkai, most hanyō seem to be powerful enough to not only deal with any human hostilities, but also to easily dispatch most yōkai if their will and aggression is very strong. It seems that this attribute mostly applies to the demons strong enough that their hanyō spawn are more powerful than an ordinary Yōkai even when diluting their power with human blood. Inuyasha is the prime example of this, born of the Inu no Taishō, a very powerful daiyōkai.
Half-demons have a big weakness. Once a month, they lose, for one day or one night, their demonic powers, and are no different from pure humans. In an episode, Kōga once said that most half-demons hide the time of their weakness because of fear. However, vice-versa, a hanyō can also become a pure demon and must endure big pains and tortures, or their life is in danger. In this case, they are also as strong as the yōkai from which they are descended from.
Inuyasha is the only hanyō which one sees in this form, and he is, as a yōkai, wild and cruel and kills random humans. Because one does not see other half-demons in the series in this form, it is unclear whether they also lose their human minds during their transformations and become lascivious for murder. Indeed, one can assume from the fact that it is so.
A half-demon does not always possess the self-healing factor of a demon. Inuyasha is aged more than 200 years, only slowly, and can recover within mere hours or days from heavy injuries, even growing a new fang in half a day. However, Jinenji seems to grow old at human speed, and recovers from injuries at human speed.
Jinenji's mother once said that there is for every pretty half-demon also one which is not it. However, really Jinenji is the only hanyō which looks "monstrous" in the series.
Natural-born half-demons are to be recognised almost always as those. However, hanyō which originated in the same way like Naraku can apparently look like pure humans, and are recognised - at least optically - not as this what they are in true.