How did the line of demarcation affect settlement of South America?

It divided Portuguese claims from Spanish ones and established Brazil as a Portuguese colony

When Columbus discovered the New World, he claimed it in the name if Spain, but pre-existing treaties already ceded ownership of new non-Christian lands to Portugal. On the other hand, Spain had already discovered and taken possession of a lot of American real estate. In 1494, the The Treaty of Tordesillas drew a new line on the globe giving Spain most of the Americas except for an eastern slice of South America, forming much of what later became Brazil.

34 years later, in 1529. the Zaragoza antimeridian continued the same line across the other half of the globe, giving Portugal title to most of Asia except for a small Eastern slice for Spain. Countries outside of Spain and Portugal did not feel bound in any way to these treaties, of course, and the brief period when Spain and Portugal had the same monarch muddied the treaty beyond enforceability.

Most of Asia was not so easily colonized, and the lasting effect of the Line of Demarcation was to establish Brazil and Formosa as Portuguese colonies for a few centuries, and a swath of the Americas from Texas, California and the Caribbean to Patagonia--as well as the Philippines--as Spanish colonies.