A techie term, it is a program that runs on Unix machines, performing a specified operation at predefined times or in response to certain events. In other words, it is a program that runs continuously in the background (behind-the-screens). The term "daemon" is from Unix, but many other operating system provide support for daemons. Technically, in terms of operating systems, a daemon is a background process, which can be defined as a single program with a single thread of control separate from the kernel.
The most common daemons likely to be encountered on the Internet are the HTTPD (HTTP daemon), also known as the Web server. Other well-known daemons are telnetd (Telnet), ftpd (FTP), popper (POP3 daemon), named (DNS daemon), and the SMTP daemon (to send e-mail). You may come across the word "daemon" when using e-mail. But don't worry, there is nothing harmful about it ;-) As we understand it, Mick Bailey, a British gentleman working on the CTSS programming staff at MIT during the early 1960's, was first to use "daemon" as a computer term. Daemons then made their way from CTSS to Multics to Unix.