De is usually translated "virtue", but the English word misleads if it suggests moral rectitude alone. De is closer to inherent power, efficacy, or the potency a thing has by being fully what it is, and in early usage it carried the sense of a moral force acting on others without coercion, closer to charisma than to rectitude.
In the Daodejing, whose title is the classic of Dao and De, de is what the Dao becomes in particular things: what each thing receives from the Dao and by which it is itself. The text's account is characteristically paradoxical. The highest de does not act as de, and therefore has de; the lowest de does not let go of de, and therefore lacks it. The point is that de is present where it is not being displayed or aimed at, and is lost at the moment it becomes a project. Its cultivation is accordingly by reduction rather than accumulation, and the sage's de is described as nourishing without possessing, acting without claiming, and accomplishing without taking credit.
In Confucianism de is the moral force of the cultivated person, and its political application is central. The Analects compare the ruler who governs by de to the pole star, which stays in place while the other stars turn about it; and they state that if the people are led by de and kept in order by ritual they will have a sense of shame and correct themselves, whereas if led by law and kept in order by punishment they will merely avoid punishment and feel no shame. That is the classical Confucian argument against government by penal law, and it was pressed directly against the Legalists, who held the opposite and who, in the Qin, had the opportunity to try it.
De also connects to the Mandate of Heaven. A dynasty holds the mandate by virtue of the de of its founders and forfeits it when de is exhausted, so the term does work in the theory of political legitimacy as well as in ethics, and the two applications reinforce one another, since a ruler's personal cultivation is thereby made a matter of state.
In later religious Daoism de is accumulated through merit and moral action and has effects within the invisible bureaucracy that Daoist cosmology describes. In modern Chinese the word remains entirely current in compounds meaning morality, virtue and moral education.