Croatoan is an ailment specifically described as a "blood-borne virus" that is demonic in origin, and causes a murderous rage in the people it infects.
Following his release, Lucifer intends to use this virus to produce chaos and massacre on Earth during the Apocalypse. The virus is to be distributed by Niveus Pharmaceuticals in a vaccine that is being used against a swine flu epidemic caused by Pestilence. The plan is averted when Sam and Bobby destroy the warehouse where the vaccine is stored.
Following a vision of Sam's in which Dean shoots a man, Sam and Dean travel to River Grove, Oregon. In searching for the man from the vision, they encounter his mother, who is being held by his brother and father, both of whom are overcome with a murderous rage. Sam and Dean save the woman from her son and husband, but it soon becomes clear that she is infected, and Dean kills her. The brothers retreat to a local clinic, where a doctor studies the blood of an infected person and notes that there appears to be traces of sulfur present, leading Sam to suspect demonic intervention. The virus is transmitted via an exchange of blood, and it takes between three and four hours for symptoms and the sulfur to manifest. The infected show a planning ability and use weapons. They also deliberately infect others.
Sam speculates that the virus could be related to a theory in John's Journal, that Croatoan - a word they find carved into a telephone pole - is the name of a demon associated with plague and pestilence. Sam calls what's going on "demonic germ warfare."
I've been pawing through Dad's journal, I found something about the Roanoke Colony. Dad always had a theory about "Croatoan." He thought it was a demon's name, sometimes known as "Deva", sometimes "Resheph", a demon of plague and pestilence.
Duane Tanner, the man Sam saw in his vision and whose family Sam and Dean first encountered exhibiting signs of infection, turns up at the medical center. He claims to have been out of town fishing and to have just returned. The medical center occupants suspect he might be infected, and they restrain him by tying him to a chair.
Recognizing the scene from his vision, Sam tries to convince Dean not to kill Duane Tanner, as they don't know yet whether he's infected with the virus or not. Dean locks Sam in a room so that he cannot interfere, but Dean is unable to follow through and kill the man. He releases Sam, and they work on an escape plan.
A nurse deliberately infects Sam, and he resigns himself to dying, but he shows no symptoms. Five hours later, the doctor announces that there is no trace of the virus in Sam's blood. And all the remaining townsfolk have disappeared.
At the end, Duane Tanner - who is revealed to be possessed - is shown communicating with Azazel via a goblet of blood, and reports that "the Winchester boy is immune" (to the virus). Because Sam's vision led them to River Grove, it's implied that this "demon virus" is the work of the Yellow-Eyed Demon.
In this alternate future, Lucifer releases the the Croatoan virus in 2012 in order to wipe out humanity. By 2014, many have been infected and died. Infected zones are quarantined and the military kills the infected, referred to as "croats" on sight. President Palin orders the bombing of Dallas following an outbreak.
Two scientists are discussing the ongoing swine flu epidemic and the vaccine being developed. A demon possessing a janitor tells them he's seen the vaccine, and that he is running an experiment of his own. He injects a sample of the vaccine into one of the scientists and knocks the other down, then he darts out the door and locks them in the room. The scientist injected with the "vaccine" rises, then attacks and kills the other scientist. The demon janitor calls someone else, and states that "it works." It is suggested that it is the Croatoan virus, and that distributing it during the epidemic as a vaccine is the plan of Pestilence and the demons'. A demon named Brady, installed at Niveus Pharmaceuticals is responsible for production.
Unlike the infected in 2.09 Croatoan, these victims are immediately overtaken by the virus. They show no higher intelligence, only a fierce anger and drive to attack others. This suggests that the demons have worked to improve the lethality of the virus.
It is revealed to Sam and Dean that Niveus Pharmaceuticals is distributing a vaccine for the swine flu epidemic, which is actually the Croatoan virus. Sam, Castiel and Bobby rush to the warehouse in order to stop the distribution. The demons infect a number of human workers in the warehouse in order to stop them, but the infected are quickly dispatched by the joint efforts of Sam, Castiel and Bobby. The three of them blow up the warehouse.