DAO design pattern is used in the data persistent layer of a Java application. It mainly uses OOPS principle of Encapsulation.
By using DAO pattern it makes the application loosely coupled and less dependent on actual database.
We can even implement some in-memory database like H2 with DAO to handle the unit-testing.
In short, DAO hides the underlying database implementation from the class that accesses the data via DAO object.
Recently we can combine DAO with Spring framework to inject any DB implementation.