When Irving's narrator is establishing the setting of the story, it is described as "about the year 1727, just at the time when earthquakes were prevalent in New England, and shook many tall sinners down upon their knees," but Irving does not mean that the area has been experiencing seismic events. Irving is satirically alluding to the Great Awakening, a religious revival movement in Puritan New England that began to gain momentum during this time. The purpose of the Great Awakening was to bring lapsed Christians back to the church. Tom Walker was living through this period and obviously failing to heed the call to return to God's grace.
Another use of satire was more subtle. Washington Irving never openly worked for abolition or said much about it publicly, but in private letters he indicated that he felt that slavery and other forms of extreme social oppression were morally repugnant. Scholars of Irving's work note that he did not want to alienate readers and steered clear of controversy. However, if we analyze his description of the devil, we see that he seems to be satirizing the demonization of African Americans and Indians.
"...the stranger was neither negro nor Indian. It is true, he was dressed in a rude, half Indian garb, and had a red belt or sash swathed round his body, but his face was neither black nor copper color, but swarthy and dingy and begrimed with soot, as if he had been accustomed to toil among fires and forges."
Irving is subtly and carefully pointing out that the devil's complexion is the result of dwelling in the fires of hell rather than an indication of his ethnicity. Irving is satirizing the beliefs of racists at the time who considered slaves and Indians to be demons.