This verse is from the Bhakti-rasāmṛta-sindhu (1.2.278) of Śrīla Rūpa Gosvāmī, who further discusses this same topic in his Laghu-bhāgavatāmṛta (Pūrva 5.41). There he refers to the Viṣṇu Purāṇa (4.15.1), where Maitreya Muni asked Parāśara, in regard to Jaya and Vijaya, how it was that Hiraṇyakaśipu next became Rāvaṇa and enjoyed more material happiness than the demigods but did not attain salvation, although when he became Śiśupāla, quarreled with Kṛṣṇa and was killed, he attained salvation and merged into the body of Lord Kṛṣṇa. Parāśara replied that Hiraṇyakaśipu failed to recognize Lord Nṛsiṁhadeva as Lord Viṣṇu. He thought that Nṛsiṁhadeva was some living entity who had acquired such opulence by various pious activities. Being overcome by the mode of passion, he considered Lord Nṛsiṁhadeva an ordinary living entity, not understanding His form. Nevertheless, because Hiraṇyakaśipu was killed by the hands of Lord Nṛsiṁhadeva, in his next life he became Rāvaṇa and had proprietorship of unlimited opulence. As Rāvaṇa, with unlimited material enjoyment, he could not accept Lord Rāma as the Personality of Godhead. Therefore even though he was killed by Rāma, he did not attain sāyujya, or oneness with the body of the Lord. In his Rāvaṇa body he was too much attracted to Rāma’s wife, Jānakī, and because of that attraction he was able to see Lord Rāma. But instead of accepting Lord Rāma as an incarnation of Viṣṇu, Rāvaṇa thought Him an ordinary living being. When killed by the hands of Rāma, therefore, he got the privilege of taking birth as Śiśupāla, who had such immense opulence that he could think himself a competitor to Kṛṣṇa. Although Śiśupāla was always envious of Kṛṣṇa, he frequently uttered the name of Kṛṣṇa and always thought of the beautiful features of Kṛṣṇa. Thus by constantly thinking and chanting of Kṛṣṇa, even unfavorably, he was cleansed of the contamination of his sinful activities. When Śiśupāla was killed by the Sudarśana cakra of Kṛṣṇa as an enemy, his constant remembrance of Kṛṣṇa dissolved the reactions of his vices, and he attained salvation by becoming one with the body of the Lord.
From this incident one can understand that even a person who thinks of Kṛṣṇa as an enemy and is killed by Him may be liberated by becoming one with the body of Kṛṣṇa. What then must be the destination of devotees who always think favorably of Kṛṣṇa as their master or friend? These devotees must attain a situation better than Brahmaloka, the impersonal bodily effulgence of Kṛṣṇa. Devotees cannot be situated in the impersonal Brahman effulgence, into which impersonalists desire to merge. The devotees are placed in Vaikuṇṭhaloka or Kṛṣṇaloka.
This discussion between Maitreya Muni and Parāśara Muni centered on whether devotees come down into the material world in every millennium like Jaya and Vijaya, who were cursed by the Kumāras to that effect. In the course of these instructions to Maitreya about Hiraṇyakaśipu, Rāvaṇa and Śiśupāla, Parāśara did not say that these demons were formerly Jaya and Vijaya. He simply described the transmigration through three lives. It is not necessary for the Vaikuṇṭha associates of the Supreme Personality of Godhead to come to take the roles of His enemies in all the millenniums in which He appears. The “falldown” of Jaya and Vijaya occurred in a particular millennium; Jaya and Vijaya do not come down in every millennium to act as demons. To think that some associates of the Lord fall down from Vaikuṇṭha in every millennium to become demons is totally incorrect.
The Supreme Personality of Godhead has all the tendencies that may be found in the living entity, for He is the chief living entity. Therefore it is natural that sometimes Lord Viṣṇu wants to fight. Just as He has the tendencies to create, to enjoy, to be a friend, to accept a mother and father, and so on, He also has the tendency to fight. Sometimes important landlords and kings keep wrestlers with whom they practice mock fighting, and Viṣṇu makes similar arrangements. The demons who fight with the Supreme Personality of Godhead in the material world are sometimes His associates. When there is a scarcity of demons and the Lord wants to fight, He instigates some of His associates of Vaikuṇṭha to come and play as demons. When it is said that Śiśupāla merged into the body of Kṛṣṇa, it should be noted that in this case he was not Jaya or Vijaya: he was actually a demon.
In his Bṛhad-bhāgavatāmṛta, Śrīla Sanātana Gosvāmī has explained that the attainment of salvation by merging into the Brahman effulgence of the Lord cannot be accepted as the highest success in life, because demons like Kaṁsa, who were famous for killing brāhmaṇas and cows, attained that salvation. For devotees such salvation is abominable. Devotees are actually in a transcendental position, whereas nondevotees are candidates for hellish conditions of life. There is always a difference between the life of a devotee and the life of a demon, and their realizations are as different as heaven and hell.
Demons are always accustomed to being malicious toward devotees and to killing brāhmaṇas and cows. For demons, merging into the Brahman effulgence may be very glorious, but for devotees it is hellish. A devotee's aim in life is to attain perfection in loving the Supreme Personality of Godhead. Those who aspire to merge into the Brahman effulgence are as abominable as demons. Devotees who aspire to associate with the Supreme Lord to render Him transcendental loving service are far superior.