1. <operating system> (Often used equivalently to daemon, especially in the Unix world, where the latter spelling and pronunciation is considered mildly archaic). A program or part of a program which is not invoked explicitly, but that lies dormant waiting for some condition(s) to occur.
At MIT they use "demon" for part of a program and "daemon" for an operating system process.
Demons (parts of programs) are particularly common in AI programs. For example, a knowledge-manipulation program might implement inference rules as demons. Whenever a new piece of knowledge was added, various demons would activate (which demons depends on the particular piece of data) and would create additional pieces of knowledge by applying their respective inference rules to the original piece. These new pieces could in turn activate more demons as the inferences filtered down through chains of logic. Meanwhile, the main program could continue with whatever its primary task was. This is similar to the triggers used in relational databases.
The use of this term may derive from "Maxwell's Demons" - minute beings which can reverse the normal flow of heat from a hot body to a cold body by only allowing fast moving molecules to go from the cold body to the hot one and slow molecules from hot to cold. The solution to this apparent thermodynamic paradox is that the demons would require an external supply of energy to do their work and it is only in the absence of such a supply that heat must necessarily flow from hot to cold.
Walt Bunch believes the term comes from the demons in Oliver Selfridge's paper "Pandemonium", MIT 1958, which was named after the capital of Hell in Milton's "Paradise Lost". Selfridge likened neural cells firing in response to input patterns to the chaos of millions of demons shrieking in Pandemonium.
2. <company> Demon Internet Ltd.
3. A program generator for differential equation problems.
[N.W. Bennett, Australian AEC Research Establishment, AAEC/E142, Aug 1965].