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The Nagas don't appear directly in Heroes 5 but they are there and they are fighting the demons
in their own archipelago alongside with the Pao orcs, the Island Orcs that you don't see in Heroes 5.
You only see the steppe Orcs of Ranaar.
It's because we chose to focus the action on the Holy Empire and the neighboring territories
but it does not mean that the rest of the world of Ashan is simply idle and waiting for Haven and Academy and Necropolis to defeat the demons.
Also it's worth knowing that between Heroes 6 and Heroes 5 there was intense civil war within Hashima.
The various Naga shoguns, or daimyos, the Lords of the Naga,
tried to overthrown the Eternal Empress.
The result was not exactly what they expected but it meant for the Nagas that they became even more secluded, isolated than before.