Digimon, or Digital Monsters, are artificially conceived "analagous life forms" residing in virtual space such as computers and wireless connections.
In Digimon Masters Online, the player is a Tamer, a human youth who can enter this virtual space and who forges bonds with individual Digimon, utilizing their powers to control dangerous wild Digimon or to solve problems.
A single Tamer may have three Digimon with them at one time, one of whom is selected at character creation and known as the Partnermon. The Partnermon cannot be removed from the party, changed, or deleted, and defaults to 100% normal size.
The Digimon are an Analogous Life Form, and each Digimon has an independent A.I. Digimon grow up solely by the Law of the Jungle. This causes them to go through several steps of Digivolution to become more powerful in order to survive. Digimon are monsters of various forms living in a "Digital World," a parallel universe that originated from Earth's various communication networks. All Digimon are hatched from a Digi-Egg, go through a baby Digimon phase, and grow into In-Training, Rookie, Champion, Ultimate and Mega form. What a Digimon needs for these steps is Data.
Basically, Digimon hunt other Digimon, use their data to grow, and move on to the next Digivolution step once they grow beyond a certain level. But the Digimon that have a partnership with humans can be forced to grow through the power of each human partner. These partners are called Tamers, and a Digimon that has a Tamer is called a Partner Digimon.
Digimon Masters Online skips the Digi-Egg -> Infancy -> In-Training parts, and players start with Digimon in their Rookie forms. Some of the Digimon can even go beyond Mega Form to Burst Mode.
On character creation, players select one of four Tamers, and one of four starter Digimon. This choice cannot be modified later and the Partnermon cannot be removed from the active party.
Mercenary Digimon are all Digimon available to the player who are not Partnermon. They can only be obtained by the hatching of certain DigiEggs, which are awarded via quests, dropped rarely by wild forms of the Digimon in question, or earned in limited-time events.
The player begins with a single extra slot in which to store an inactive Mercenary Digimon, and more are available in the cash shop and through certain events.
All "enemy" Digimon with whom the player may enter combat are Wild Digimon. They may drop DigiEggs, some of which can be used to hatch Mercenary Digimon.
Most DigiEggs dropped by Wild Digimon contain supplies and resources such as racial data. See the DigiEgg article for further details.