If I use UE4 as a “Demo” for a product (Example: Showing a chair in a house that they can walk around in), and the demo is free, but the product is not, am I required to give Unreal a royalty of said product sales due to using UE4 to demo said product?
Have you read this: Frequently Asked Questions - Unreal Engine
I would recommend contacting Epic directly if you have questions related to licensing and royalties.
Royalties are only owed on revenues for a Product (as defined under the EULA). In this case, the chair/house is not a Product so there are no royalties owed.