The term originates from the Greek δημοκρατία (dēmokratía) "rule of the people", which was coined from δῆμος (dêmos) "people" and κράτος (kratos) "power" or "rule" in the 5th century BCE to denote the political systems then existing in Greek city-states, notably Athens; the term is an antonym to ἀριστοκρατία (aristokratia) "rule of an elite." While theoretically these definitions are in opposition, in practice the distinction has been blurred historically. The political system of Classical Athens, for example, granted democratic citizenship to an elite class of free men and excluded slaves and women from political participation. In virtually all democratic governments throughout ancient and modern history, democratic citizenship consisted of an elite class until full enfranchisement was won for all adult citizens in most modern democracies through the suffrage movements of the 19th and 20th centuries. The English word dates to the 16th century, from the older Middle French and Middle Latin equivalents.

Democracy contrasts with forms of government where power is either held by one person, as in a monarchy, or where power is held by a small number of individuals, as in an oligarchy. Nevertheless, these oppositions, inherited from Greek philosophy,  are now ambiguous because contemporary governments have mixed democratic, oligarchic, and monarchic elements. Karl Popper defined democracy in contrast to dictatorship or tyranny, thus focusing on opportunities for the people to control their leaders and to oust them without the need for a revolution. 

Several variants of democracy exist, but there are two basic forms, both of which concern how the whole body of all eligible citizens executes its will. One form of democracy is direct democracy, in which all eligible citizens have direct and active participation in the decision making of the government. In most modern democracies, the whole body of all eligible citizens remain the sovereign power but political power is exercised indirectly through elected representatives; this is called representative democracy. The concept of representative democracy arose largely from ideas and institutions that developed during the European Middle Ages, the Reformation, the Age of Enlightenment, and the American and French Revolutions.