Dao means way, road, path or method, and in Chinese thought it names both the course things follow and the right way of acting. Every Chinese school used the word. What distinguishes them is what they took it to be, and a great deal of Chinese philosophical argument takes the form of a dispute about the Dao conducted in shared vocabulary.
In the Daodejing the Dao is the unnameable source and pattern of everything. The text opens by stating that a Dao that can be spoken is not the constant Dao and a name that can be named is not the constant name, a claim about the limits of language placed deliberately at the front and setting the terms for everything after it. The Dao is described as prior to heaven and earth, empty yet inexhaustible, the mother of the ten thousand things; and it works by not contending, by the soft overcoming the hard, and by the usefulness of what is empty, as the hole makes the wheel-hub useful and the space makes the room. The corresponding human practice is wu wei, action without forcing, and ziran, spontaneity.
In the Zhuangzi the emphasis moves from cosmology to freedom of perspective. The Dao is said to be everywhere, including in tiles and in excrement; the skill stories, the cook whose blade has not needed sharpening in nineteen years because he moves through the spaces in the ox, describe a mastery in which the agent no longer deliberates; and the text's characteristic humour is directed at the fixity of any single point of view, including its own.
In Confucianism the Dao is the way of the ancient sage-kings and, by extension, the right ordering of human relations. Confucius says that a person can broaden the Dao, not the Dao the person, and that having heard the Dao in the morning one might die content that evening. It is something transmitted, practised and embodied. The disagreement with Daoist usage is genuine and was stated as such: the Daodejing's line that when the great Dao was abandoned there arose benevolence and righteousness is a direct criticism of the Confucian programme, holding that the virtues become necessary only once the thing they substitute for has been lost.
Later developments extend the term further. In religious Daoism the Dao becomes an object of practice and, in some strands, is personified. Chinese Buddhists used the word in translating Buddhist terms, and Chan is called a Dao. Neo-Confucianism ties it closely to li, principle. The breadth is not vagueness so much as a shared question that every school felt obliged to answer.