Democracy may be used either narrowly to describe a nation-state (government) specifically, or more broadly to describe a society as a whole.
As a form of government, democracy aspires to serve under "the people" rather than ruling over them. This ideal is pursued by implementing some system of voting, usually involving indirect representation, as described at length in the sections below.
As a society, democracy implies that the people's self-rule begins with the most local "government" level possible: an individual citizen. A citizen governs via individual liberty (personal sovereignty) and private property (personal domain), which together usually imply civic duty (personal responsibility).
Because these two senses of democracy (democratic government (see sections below) and democratic society) are inter-related and used interchangeably, they are often confused. While a democratic society implies a democratic government (nation-state), the reverse is not always true.
Democracy is often sold as an end in itself, but it is merely a means to an end, and you might not like it unless certain aspects about the ends are etched in stone before you sign on.
The word "democracy" is quite overused and abused. In too many people's minds, any system with popular voting as a selection mechanism can be sold as "Democracy", but such mechanisms are only an adjunct to a free society, not a guarantee. Such "democracy" is far from being the panacea that many people assume it to be. For that reason, I say that democracy is overrated.
What does democracy mean to you? Is it freedom? Is it due process? Is it the right to own property? Is it voting? Is it majority rule? Is it the right to vote yourself a slice of somebody else's property if they're not popular enough to stop you? I try to avoid using "democracy" as the basis of any argument anymore. I may use it with one meaning in mind, but my readers may read something else entirely.
Demagogues exploit these multiple meanings to pull a bait and switch on the masses: First they butter us up by using "democracy" frequently as a synonym for civil liberty. Then, when we come to think that democracy is the ultimate good in society, the demagogues swap in the majority rule definition and tell us that we must acquiesce to whatever sacrifice of those very civil liberties that a popular majority can be panicked into suspending "temporarily".
By taking our minds off of liberty, demagogues set us up to give it away oh so democratically.
Majorities have an unfortunate tendency to demand what they want when they want it. Unchecked, they can and will trample the rights of an unpopular minorities. This unchecked majority rule is called majoritarianism. It is like two wolves and a sheep voting on what to eat for dinner.
Get this: If majority rule is total, then it is totalitarianism as surely as if it were a self-appointed dictator. Serfdom is no more tolerable because one's masters were elected. Some may call it democracy, but that just means that democracy is not the sine qua non of enlightened society. Therefore we need to pin our government to something more specific than majoritarianism masquerading as democracy.
Democratic selection processes are merely the best way to arrive at consensus when consensus is necessary. Therefore, it is essential to limit consensus-building (majority rule) to those few necessary subtasks that can't be completed without it.
Put another way: Majority rule is adequate to decide questions, but it is not adequate to choose what questions to answer. That's why we have a Constitution. Through it, the people explicitly delegate to government a short list of enumerated powers.
Government should never arrogate new powers to itself via simple majority. New powers require new explicit grants in the Constitution. For that we need super majorities... and cumbersome processes that get everyone's attention and (we hope) force an amendment's backers to consider how a new power may be used against them with the next turn of the popularity wheel.