Let's put the Demonomicon into a Bag of Holding! What could possibly happen?

Question

According to Tasha's Cauldron of Everything, the Demonomicon of Iggwilv can hold up to 10 fiends at a time, record their name and depravities, and might even have 1-4 demons inside.

However, it also lets said fiends possess its user while both the user and the Demonomicon are on the same plane. Obviously, this includes the Material Plane, its echoes, the Elemental Planes, the Outer planes, and any other planes out there.

However, my question is, if we were to put the Demonomicon into, say, a bag of holding, a portable hole, or a Heward handy haversack, would the item's extradimensional space count as its own plane, or would it still count as being in the same plane as the item holding it?

Answer 1

Lots of things could happen! But RAW the possession probably doesn't work if the Demonomicon is in an extradimensional space

The description of a Portable Hole clearly states that

You can use an action to unfold a portable hole and place it on or against a solid surface, whereupon the portable hole creates an extradimensional hole 10 feet deep. The cylindrical space within the hole exists on a different plane, so it can't be used to create open passages.

This is pretty decisive that the extradimensional space, whatever other properties it might have, is not on the same plane as the one on which the item itself exists. The description for the Portable Hole is otherwise similar enough to items like the Bag of Holding and the Handy Haversack that I would feel very comfortable applying that reasoning to them as well as the Portable Hole.

There is some discussion of whether or not the extradimensional space in a Bag of Holding and similar items is truly a different plane or not here and here. But regardless, as DM you easily have the authority to tweak that definition if you like.

Why you might want to rule that those extradimensional spaces are their own planes

The major reason to rule that these are distinct planes in this specific case is the Containment effect of the Demonomicon:

When you finish a long rest, if you and the Demonomicon are on the same plane of existence, the trapped creature of the highest challenge rating within the book can attempt to possess you. You must make a DC 20 Charisma saving throw. On a failure, you are possessed by the creature, which controls you like a puppet. The possessing creature can release you as an action, appearing in the closest unoccupied space. On a successful save, the fiend can’t try to possess you again for 7 days.

A save with DC 20 is really, really hard to beat. With a +5 to the saving throw, the creature making the save will succeed only one time in every four. That means that a PC attuned to the book will spend a lot of time possessed. A PC that wants, or ends up with, this book will need some way to deal with this effect, and an extradimensional storage space is one reasonable way to attempt that. Other options, like specifically buffing saving throws or the Charisma attribute are also reasonable but require more work to be effective (more magic items, for example).

Why you might want to rule that those extradimensional spaces are not their own planes

Or at least, not so completely distinct that the possession effect of the Demonomicon is totally suppressed. The Demonomicon is an Artifact-- a unique and incredibly powerful magical item in the setting. Its power is such that the plot of a major part of the campaign might be bent around it, and attuning it should do far more than just give a PC a bunch of bonuses. A party that can obtain and wield the Demonomicon is also going to have easy access to extradimensional spaces similar to a Bag of Holding through a variety of methods. Allowing an easy way to avoid one of the most potent dangers of such a powerful Artifact is a pretty strong decision.

Decide how much the plot is going to revolve around the Demonomicon to find your answer

You will need to think of some way to deal with this item if you allow your players to have it, but if you do not allow the PC to avoid the possession effect then you'll have to deal with that. This is time that the player will not be in control of their PC, which can be tricky to handle unless you relegate it to downtime-- what will you do if the PC fails the saving throw right before a boss fight? It's not even clear how long the possession lasts or how it might be ended outside of the demon's choice to stop. If you don't have a solid plan for how to handle this, it will be easier and less disruptive to your game to allow the possession effect to be more casually avoided.

But I recommend never giving players something like an easy way to avoid a downside without some consequences to balance it out. A clever idea that is cheese-adjacent works for a time, but not forever. It doesn't have to be the possession effect, and could be as simple as being hounded by demons for as long as the book is attuned. If you want more story to involve the book you can play those consequences up, and if you don't you might decide that the book's detrimental effects are enough of a consequence.

In short, Artifacts are amazing story leverage. "What could possibly happen" should be interpreted pretty expansively by the DM to serve that end, rather than just determining how much of a power boost a PC might get-- that's what lesser magic items are for.

Answer 2

Extradimensional space is not the same as another plane(?)

The answer to this can be reached somewhat indirectly by considering how such extradimensional spaces are described to function in Barovia (Curse of Strahd, page 24):

No spell - not even wish -- allows one to escape from Strahd's domain. Astral Projection, teleport, plane shift, and similar spells cast for the purpose of leaving Barovia simply fail...

And further:

Magic that summons creatures or objects from other planes functions normally in Barovia, as does magic that involves an extradimensional space. Any spells cast within such an extradimensional space (such as that created by Mordenkainen's Magnificent Mansion) are subject to the same restrictions as magic cast in Barovia.

Because of the limitations on plane shifting, but not on entering extradimensional space, and because of how the two are referred to separately, it should be safe to conclude that the inside of a Bag of Holding is not considered to be on another plane.

Put another way: could you cast Plane Shift to enter a Bag of Holding, or use it to exit it to the plane the Bag of Holding's exterior exists on? If not, then it would seem to imply that it is not considered to be another plane.

However, contrasting evidence also exists

Based on answers to questions about Is the “pocket dimension” a familiar goes into a demiplane or an extradimensional space? and Can I escape from a bag of holding with Banishment?, it seems such extradimensional spaces are considered demiplanes. But what makes a demiplane distinct from a plane? How does this work in contrast to the Barovia issue? This makes a clean answer hard to arrive at, which naturally means it may simply be up to the DM to decide.