Daemon-Tools creates a virtual CD-ROM drive on your computer and lets you mount a CD image onto the virtual drive. This way, you can rip all of your games onto your hard drive and pretty much do away with disc swapping.
Ubisoft recently released a patch for one of their games that scans for software like Daemon-Tools. Many people use Daemon tools to play illegally downloaded games. If the patched game detects that you're running Daemon-Tools, the game won't run.