In a Vmc demo, why is it important to lose 1 knot per second?
Why do we want to lose 1 knot per second in a VMC demo?

To more accurately determine where VMC is:
As Carlo Felicione's answer says, VMC changes day by day, and you want to determine it precisely.  You can't do that if you're slowing too rapidly.

To permit smooth control of the aircraft:
During a VMC demo, rudder required is determined by aircraft speed. The slower you go, the more rudder you need.  The more abruptly your speed changes, the more abruptly your rudder needs to adjust to compensate.  Since the point of a VMC demo is to determine when your rudder fails to control your heading, abrupt speed changes should be avoided.

To allow consistent control techniques:
Have you noticed that it's really hard to hold a particular vertical speed using the vertical speed indicator?  Usually, you select a pitch, hold it, and then reference the VSI to determine whether a pitch adjustment is necessary. The same is true of airspeed loss.  During a VMC demo, usually, the pilot will configure the airplane for engine-out flight and then pitch to an attitude that will create a 1 knot per second loss of airspeed. As pitch settings are fairly unchanging from flight to flight, this allows you to do the maneuver with more consistency.  You can put the rate of airspeed loss more or less in the back of your mind and concentrate on your rudder control, which is the point.


How do we know we're losing 1 knot per second?

Counting: As you say, looking at the airspeed indicator and counting seconds is a simple and reliable way to do it.

Known pitch settings: As mentioned above, pitch to a known setting and you'll get pretty close to 1 knot per second without the fuss of counting.  As you gain more experience this will become the way you'll do it.