The Sword of Daylight (or simply Daylight) is a sacred weapon which can only be wielded by the Trollhunter and Jim's primary choice of weapon.
When the Trollhunter says "For the glory of Merlin, Daylight is mine to command!" the sword and armor appears on his/her person.
Summoning: Daylight appears with the Trollhunter Armor when the Amulet is activated by the user and recognizes the Trollhunter as its unique owner, being able to be called to his/her hands in spite of being separated.
Cutting: Daylight has a wide blade that has extraordinary cutting power as Jim once accidentally slashed into a boulder and later clopped off a fire hydrant. It can also cut a large truck in half with just one swift strike. It's capable of destroying a troll with just one stroke.
Light Aura: The sword's glow is painful to trolls, as both Bular and Strickler flinched upon having it drawn in their faces.
Sword Beam Emission: Shown once in "The Battle of Two Bridges", Jim created a huge beam of light while he struck his sword into Bular, enough to cause him to crumble to stone half-dead. Later, Jim fired a sword-beam from the blade while saving Claire from a Blood Goblin. The cutting power of these beams is questionable, as it is seen dispersing when it struck the wooden crates behind it.
Barrier Generation: The sword is able to create a barrier strong enough to refract an incoming tidal wave and Morgana's magic blast.
Resizing: The sword is also capable of resizing itself to fit its master's size, as it shrank to Jim's preferred balance from that of its previous master, Kanjigar.
Incapable of Killing Immortals: Despite its powerful magic, the sword (and possibly the Trollhunter's other weaponry) are unable to kill wizards like Morgana, since they are meant only to hunt trolls.
Unable to Kill Gunmar: As proclaimed by Kanjigar himself, Jim's sword has fought against Gunmar many times in the past, but it has never killed him. Daylight was built specifically to protect and maintain the balance of the human and troll worlds. Only if the Trollhunter unlocks the legendary Eclipse Blade can Daylight be able to finish Gunmar once and for all.
Trollish Weapons: During the first season, Bular, Stricklander, and Nomura are seen blocking Daylight with their own weapons, suggesting that they have enchantments that block the sword's magic.
The Mark of Angor Rot: Angor Rot was able to use some sort of curse to take the Sword of Daylight from Jim and use it as his own. The mark did not affect Jim's other weapons, like his glaives and shield. Luckily, if one cuts Angor's own eye and places it into the amulet, then the Trollhunter will be able to ward off his magics, like what Jim did to permanently reclaim Daylight from Angor.
The Sword of Daylight resembles a falchion in design. The falchion was a single-edged sword of European design. Unlike traditional falchions, however, Jim is seen wielding the sword with one or both hands.
The Sword of Daylight does not have a visible sheath. When not in use, Jim either wills it out of existence or clips it to his back via an unseen mechanism.
Jim can still wield Daylight even without his armor. Though it's still unknown if he can will Daylight to appear without summoning his armor as he's never been seen doing it.
The Sword of Daylight cannot permanently kill Gunmar without all three Triumbric Stones, which are tied to Gunmar's lifeblood. Once the Trollhunter collects all of the stones, they will unlock the sword's counterpart, the Eclipse Blade, and its Armor.