A daemon (pronounced DEE-muhn) is a program that runs continuously and exists for the purpose of handling periodic service requests that a computer system expects to receive. The daemon program forwards the requests to other programs (or processes) as appropriate. Each server of pages on the Web has an HTTPD or Hypertext Transfer Protocol daemon that continually waits for requests to come in from Web clients and their users.
In mythology, a daemon, according to Webster's, was "an attendant power or spirit."
Daemon can be confused with demon, which has a different but similar meaning. The New Hacker's Dictionary says that a daemon is a program that runs by itself directly under the operating system whereas a demon is part of a larger application program.