Whilst typing this out, and going line-by-line it became apparent I made a mistake in the importing of DaisyUI at the top of my style.css file. I did not read the documentation carefully (dyslexia kicks in with a punch).

Wrong ❌

In style.css:

@import "tailwindcss";
@import "daisyui";

Correct ✅

In style.css:

@import "tailwindcss";
@plugin "daisyui";

The mistake of typing it in myself instead of copying the code directly from their official documentation. I missed that it's plugin and not import. That's because DaisyUI is a plugin to tailwindcss and not it's own CSS framework.

Writing out issues on StackOverflow really helps with problem-solving! Hopefully this benefits others who might run into this same error message.