The synopsis in general is that a town offers tributes to a demon to appease it . The main character is chosen to be the tribute when the story starts, and is told to go to where the demon is residing. However, once there, he/she finds out the entity in question is not what the legends say and actually has no interest in hurting anyone.

If anyone knows any manga or light novels like that, it would be really appreciated. The demon doesn't necessarily have to be a demon specifically. What matter is that people were freaked out enough to base a legend around it and prepare tributes.

I know a chapter in an anthology that's like that.
Read Nickelodeon by Douman Seiman, chapter 25 ("Water Spirit Stone").
It's about a village sacrificing a youth to a water spirit.

Something with a similar feel would be the light novel "Regarding the Story of My Wife, Medusa". The main character isn't sacrificed, but he is captured by a carnivorous medusa and is pretty surprised that she didn't eat him right away. I personally don't really like the way the story is headed but it's thematically close to what you want, and is longer than a single chapter.

Niehime to Kemono no Ou
Unjou Roukaku Kidan
Suijin no Ikenie

DONDAKEE!!

Second Niehime to Kemono no Ou. 😀
Habaegui Sinbu aka Bride of the water God seems to fit as well.

"I'm going to aim to be my own kind of princess!" - Usagi Tsukino

Thanks for the suggestions!