Dæmons are the external physical manifestation of a person's 'inner-self' that takes the form of an animal. Dæmons have human intelligence, are capable of human speech—regardless of the form they take—and usually behave as though they are independent of their humans. Pre-pubescent children's dæmons can change form voluntarily, almost instantaneously, to become any creature, real or imaginary. During their adolescence a person's dæmon undergoes "settling", an event in which that person's dæmon permanently and involuntarily assumes the form of the animal which the person most resembles in character. Dæmons are usually of the opposite sex to their human, though same-sex dæmons do exist.
Although dæmons mimic the appearance and behaviour of the animals they resemble perfectly, dæmons are not true animals, and humans, other dæmons, and true animals are able to distinguish them on sight. The faculty or quality that makes this possible is not explained in the books, but it is demonstrated extensively, and is reliable enough to allow humans to distinguish a bird-shaped dæmon within a flock of birds in flight.
Dæmons frequently interact with each other in ways that mirror the behaviour of their humans, such as fighting one another when their humans are fighting, or nuzzling one another when their humans embrace, and such contact between dæmons is unremarkable. However, human contact with another individual's dæmon is taboo.