Daemon Tools is a software application that allows users to create virtual drives on their computers. This enables users to mount disk image files, such as ISO or MDX formats, without needing physical discs. It is commonly used for accessing software, games, and media stored in these image files. The program is popular among gamers and software developers because it simplifies the process of managing and using disk images. By emulating a physical drive, Daemon Tools helps users run applications directly from their hard drives, improving convenience and performance.