Daily Notes will create a new note that is automatically named with the current date. If it already exists, it will open that note. This is a useful way to create a daily log, todo list, or a list of links to notes that you have created on a specific day.
The date format and default folder for Daily Notes can be set in Settings => Plugins, by clicking the gear next to the name. The default date format is "YYYY-MM-DD" (ISO format). This format means that a list of daily notes, listed in alphabetical order, will also be in chronological order.
You can also define a template file for daily notes. This file will be copied into your Daily note when it's created, so it's a good place to put tags or links you use every day.