What is the difference between DAO and Repository patterns?

OK, think I can explain better what I've put in comments :). So, basically, you can see both those as the same, though DAO is a more flexible pattern than Repository. If you want to use both, you would use the Repository in your DAO-s. I'll explain each of them below:

REPOSITORY:

It's a repository of a specific type of objects - it allows you to search for a specific type of objects as well as store them. Usually it will ONLY handle one type of objects. E.g. AppleRepository would allow you to do AppleRepository.findAll(criteria) or AppleRepository.save(juicyApple). Note that the Repository is using Domain Model terms (not DB terms - nothing related to how data is persisted anywhere).

A repository will most likely store all data in the same table, whereas the pattern doesn't require that. The fact that it only handles one type of data though, makes it logically connected to one main table (if used for DB persistence).

DAO - data access object (in other words - object used to access data)

A DAO is a class that locates data for you (it is mostly a finder, but it's commonly used to also store the data). The pattern doesn't restrict you to store data of the same type, thus you can easily have a DAO that locates/stores related objects.

E.g. you can easily have UserDao that exposes methods like

Collection<Permission> findPermissionsForUser(String userId)
User findUser(String userId)
Collection<User> findUsersForPermission(Permission permission)

All those are related to User (and security) and can be specified under then same DAO. This is not the case for Repository.

Finally

Note that both patterns really mean the same (they store data and they abstract the access to it and they are both expressed closer to the domain model and hardly contain any DB reference), but the way they are used can be slightly different, DAO being a bit more flexible/generic, while Repository is a bit more specific and restrictive to a type only.

Frankly, this looks like a semantic distinction, not a technical distinction. The phrase Data Access Object doesn't refer to a "database" at all. And, although you could design it to be database-centric, I think most people would consider doing so a design flaw.

The purpose of the DAO is to hide the implementation details of the data access mechanism. How is the Repository pattern different? As far as I can tell, it isn't. Saying a Repository is different to a DAO because you're dealing with/return a collection of objects can't be right; DAOs can also return collections of objects.

Everything I've read about the repository pattern seems rely on this distinction: bad DAO design vs good DAO design (aka repository design pattern).

DAO and Repository pattern are ways of implementing Data Access Layer (DAL). So, let's start with DAL, first.

Object-oriented applications that access a database, must have some logic to handle database access. In order to keep the code clean and modular, it is recommended that database access logic should be isolated into a separate module. In layered architecture, this module is DAL.

So far, we haven't talked about any particular implementation: only a general principle that putting database access logic in a separate module.

Now, how we can implement this principle? Well, one know way of implementing this, in particular with frameworks like Hibernate, is the DAO pattern.

DAO pattern is a way of generating DAL, where typically, each domain entity has its own DAO. For example, User and UserDao, Appointment and AppointmentDao, etc. An example of DAO with Hibernate: http://gochev.blogspot.ca/2009/08/hibernate-generic-dao.html.

Then what is Repository pattern? Like DAO, Repository pattern is also a way achieving DAL. The main point in Repository pattern is that, from the client/user perspective, it should look or behave as a collection. What is meant by behaving like a collection is not that it has to be instantiated like Collection collection = new SomeCollection(). Instead, it means that it should support operations such as add, remove, contains, etc. This is the essence of Repository pattern.

In practice, for example in the case of using Hibernate, Repository pattern is realized with DAO. That is an instance of DAL can be both at the same an instance of DAO pattern and Repository pattern.

Repository pattern is not necessarily something that one builds on top of DAO (as some may suggest). If DAOs are designed with an interface that supports the above-mentioned operations, then it is an instance of Repository pattern. Think about it, If DAOs already provide a collection-like set of operations, then what is the need for an extra layer on top of it?

DAO is an abstraction of data persistence.
Repository is an abstraction of a collection of objects.

DAO would be considered closer to the database, often table-centric.
Repository would be considered closer to the Domain, dealing only in Aggregate Roots.

Repository could be implemented using DAO's, but you wouldn't do the opposite.

Also, a Repository is generally a narrower interface. It should be simply a collection of objects, with a Get(id), Find(ISpecification), Add(Entity).

A method like Update is appropriate on a DAO, but not a Repository - when using a Repository, changes to entities would usually be tracked by separate UnitOfWork.

It does seem common to see implementations called a Repository that is really more of a DAO, and hence I think there is some confusion about the difference between them.