Ether is the native currency of the Ethereum blockchain; Ether is generally referred to as Ethereum or by its ticker ETH. Ether pays for the computing power and other services offered by Ethereum, a type of decentralized internet and app system.
Ether does not require a third party to process a transaction since it is a blockchain and hence is not owned by anyone. Ether should be considered as fuel for building the apps on the decentralized Ethereum network.
Considering Ether as digital money can be misleading since Ether follows the same underlying principle of demand and supply. If more people use it, Ether's demand shall rise, and so will the price, just like oil. Therefore Ether should be considered a commodity or programmable money.