Daily Activity Recordings for Artificial Intelligence (DARai, pronounced "Dahr-ree") is a multimodal, hierarchically annotated dataset constructed to understand human activities in real-world settings. DARai consists of continuous scripted and unscripted recordings of 50 participants in 10 different environments, totaling over 200 hours of data from 20 sensors including multiple camera views, depth and radar sensors, wearable inertial measurement units (IMUs), electromyography (EMG), insole pressure sensors, biomonitor sensors, and gaze tracker. To capture the complexity in human activities, DARai is annotated at three levels of hierarchy: (i) high-level activities (L1) that are independent tasks, (ii) lower-level actions (L2) that are patterns shared between activities, and (iii) fine-grained procedures (L3) that detail the exact execution steps for actions. The dataset annotations and recordings are designed so that 22.7% of L2 actions are shared between L1 activities and 14.2% of L3 procedures are shared between L2 actions. The overlap and unscripted nature of DARai allows counterfactual activities in the dataset. Experiments with various machine learning models showcase the value of DARai in uncovering important challenges in human-centered applications. Specifically, we conduct unimodal and multimodal sensor fusion experiments for recognition, temporal localization, and future action anticipation across all hierarchical annotation levels. To highlight the limitations of individual sensors, we also conduct domain-variant experiments that are enabled by DARai's multi-sensor and counterfactual activity design setup. The code, documentation, and dataset are available at the dedicated DARai website: https://alregib.ece.gatech.edu/software-and-datasets/darai-daily-activity-recordings-for-artificial-intelligence-and-machine-learning/