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A process is the representation of a computer program running inside a UNIX operating system.
In addition to system processes and daemons a UNIX operating system will typically have at least a few, if not mostly, regular user processes running, processes that are not run in "kernel-space" are said to be running in "user-space", hence "Plan 9 from User-Space", an experimental Bell-Labs operating system that utterly failed to replace UNIX. Plan9 had an unusual emphasis on running what would normally be kernel operations in user-space.
Processes are always associated with a user, system process are associated with special users such as nobody, ftp or root, which normally cannot actually log in. Processes run with the limitations of their associated user. For example a program run by a regular user could not access other regular users files or system files, whereas a process running as root would be omnipotent and could do anything. This is a key part of UNIX security technology.
Other arbitrary confinements may be placed on processes, such as Solaris's "containers" and FreeBSDs "jails".
UNIX is, and always has been a multi-tasking/multi-user operating system. In theory a nearly unlimited number of processes may be run by a nearly unlimited number of users. Accordingly UNIX has very advanced process handling, which is necessitated by the use-cases of the original UNIX operating system which was typically installed in a basement somewhere and accessed simultaneously by dozens or even hundreds or thousands of users.
Processes are capable of communicating between themselves (IPC or "Inter-Process Communication") and are said to be "spawned" and to "die", processes also can have "parent" or "child" processes. A special process is init which regulates the processes, initializes the system on boot and conducts other functions. (init's functions vary somewhat among versions of UNIX).
Daemons are a special kind of process that are not attached to any controlling terminal, are normally child processes of init itself and run invisibly, performing background tasks such as system upkeep and running servers.

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This is an article from the Knowledge Base, a project of the Vistua Online Helpdesk to form a body of articles relating to common system topics. You are welcome to contribute to it.