I agree with Don. The term pilot episode has come to mean episode one. This is not a funded broadcast tv pilot, but as Don said a demo. It's more of a pitch, or an extended elevator speech.
You should see the "demo" of South Park - it was an electronic Christmas card some Hollywood suit sent out to his Christmas card list and it went viral. Doesn't look much like South Park does today, or even like the show's actual pilot episode.
As far as "reality TV" - it's really one of two things: either it's a game show with more storytelling to it, or it's a semi-staged documentary. I had an ex-girlfriend actor who complained that reality shows were killing off gigs for actors when they started replacing dramas and comedies. I suppose she didn't realize that most of those people were actors as well, after a fashion!
Want a serious example of the difference between a demo and an album-grade track? Trent Reznor did a CD-single for "Head Like a Hole" shortly before the release of his first album, Pretty Hate Machine. Compare the demo version on the single with the finished version on the album - WORLDS apart, although they're the same song. Ironically, in both cases, Trent was the only musician: he used to record everything solo, playing all the instruments and mixing them together in the studio, before eventually using some members of his touring band as performers on his albums.
The point being that whatever you saw ISN'T likely the actual pilot episode that's airing soon. It was probably shot to "garage band" standards and had just enough polish to get the show's concept across without costing an arm and a leg. People didn't do it this way in the past - it started becoming more popular as the quality and availability of consumer-grade video/audio/editing equipment put at least a decent grade of output within reach of Joe Six-pack. Using rented equipment, you could make a demo for just a few thousand dollars not including talent, and have a finished product practically overnight - something like that was impossible in the age of filmed TV shows.