A DAO exists entirely online and they are designed to be autonomous. However, they often require maintenance by specialized programmers to encode elements into the organization that cannot be performed by smart contracts.
A DAO is completely decentralized, having no ownership or governance from any individuals. Instead, they operate like a blockchain, with any actions being decided by consensus via a distributed network of computers.
A DAO can be a very effective and democratic financial system, and has multiple safeguards in place to protect its members, however it is not infallible. This point was driven home in May 2016, during the Genesis DAO hack.