[I]t uses the Hellfire fire control system [and is] basically a 25 pound 70mm rocket, with a laser seeker, a six pound warhead and a range of about six kilometers. Laser designators on a helicopter, or with troops on the ground, is pointed at the target, and the laser seeker in the front of the DAGR homes on the reflected laser light . . . . The guided 70mm rocker is to be used against targets that don't require a larger (hundred pound), and more expensive (over $100,000) Hellfire missile, but still need some targeting precision. . . . The DAGR makes an excellent weapon for UAVs, especially since you can carry four of them in place of one Hellfire.
DAGR is allegedly accurate to within a few feet of the aiming point.
By comparison, one of the Air Force's leading ordinance projects is the "small diameter bomb", which is a 250 pound guided bomb, about ten times the size of the DAGR. The small diameter bomb will be the smallest bomb in the Air Force's arsenal when it enters service.
The DAGR is part of a long term trend towards smaller, high accuracy, high cost weapons in the military. The trend arises from the limited cargo capacity of small drones, the reduced need to have a large explosion or fire multiple missiles to compensate for an inability to consistently hit a point exactly on a target, and a preference for an ability to hit more targets rather than bigger targets.
Furthermore, the trend reflects a shift in expectations about likely military opponents from the heavily armored vehicles that attack helicopters were designed to defeat, to lightly armed personnel and irregular mechanized infantry U.S. forces have faced in Iraq and Afghanistan. Recent experience has also created a stronger desire to avoid collateral damage to allies and neutral parties in close quarters combat.
It remains to be seen how long the latest wave of guided munitions will remain expensive. Something on the order of 90% of the cost of guided munitions goes into their guidance and targeting systems. The raw materials that go into those systems cost something on the order of a few hundred dollars or less. The bulk of the cost of a Hellfire or DAGR comes from the costs of developing and manufacturing the electronics. In theory, a mass production deal could dramatically reduce those costs.