Daphne is Bloom's older sister, and the eldest daughter of King Oritel and Queen Marion of the recently resurrected world, Domino. She was also the last fairy to have acquired the great sea/ocean-themed transformation and power of Sirenix.
She was/is the spirit of an extremely powerful nymph, bound to the bottom of Lake Roccaluce in Magix, as she was killed sixteen years before the beginning of the events of the show when the three Ancestral Witches destroyed her world and its inhabitants and returned to Domino after it was successfully ressurected and reborn in The Secret of the Lost Kingdom movie.
In the first Winx movie, Daphne demonstrates her resourcefulness: solving Bloom's problem with finding the secret Domino library by giving Bloom her mask. With it, Bloom would be seeing through Daphne's eyes and see Domino as she remembered it before it was obliterated.Despite the fact that there is a constant aura of mystery and secrets about her, Daphne was a kind and loving woman, and an utterly devoted sister to Bloom (she willingly sacrificed herself for her younger sister), to whom she acts as a guardian spirit of sorts, guiding her through her troubles with both her magic and adventures, telepathically communicating with Bloom if she has any trouble.
Daphne's age remains a mystery, though it is known she was either a young adult or a teenager at the time of her death (due to examination of her pictures from the Book of Destiny in the first movie). Along with her age, Daphne's upbringing and her fairy form are mysterious even if she has been seen to be powerful enough to fly without wings, although that could be because she was a Nymph (however it was never precised whether Nymph is a fairy form or just a title).