A networked device (range of networked devices or subnet), eg a computer, that is placed outside a firewall or other security measures on a network.
The most common reason for a machine being placed in the DMZ is to allow it to run internet services such as a web server or multiplayer game server without impeeding on the rest of the network's security.
The machine may be defined as in the DMZ by a router, or firewall, or may be physically connected in such a way that it is not affected by the activities of a firewall or other security device.
The term DMZ is derrived from the political/miliary term DMZ, meaning Demilitarized Zone (See another definition).
1) It keeps coming up with a server not found error, try putting it in the DMZ.