That was just a swarm of noob Darkspawn, not one of the most powerful non-dragon demons in the game.
I actually just thought of a theory to explain several things about the franchise, including him.
What if the original Darkspawn were actually created by ancient Dwarf mages, not the Tevinter. Those dark Dwarf mages created some magical things like the idol we found to try to corrupt other dwarves and take over. Some other Dwarf mages fought back but were losing ground until they managed to cut dwarves off from the Fade (explaining why there aren’t any Dwarf mages now) and trap the Darkspawn deep underground.
Either their spell is weakening, or something weird happened to Sandal when he was a baby (I remember either a conversation with Bodan or a codex entry that said he found Sandal in the Deep Roads or adopted him).
Centuries later, a Tevinter was taken by a demon and released the Darkspawn, explaining the Chantry’s origin for them. The thaig Varric’s brother found out about was actually the shallowest of the cities taken over by those dark Dwarf mages, which is why it was so different from any of the other thaigs he knew of and had the idol.