As a web host, I am frequently asked what a '404' error is. Customers see this in their web statistics, sometimes the web site is configured to send daily reports and 404 errors show up there.
Simply put, a 404 error is a 'page not found' error. Actually, it probably says that right in the error report.
What they're really asking is 'why am I getting it?'. There are several reasons; usually they are not reason for alarm. A 404 is caused by somebody (or some robot) requesting a page from the site that doesn't exist.
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If there is an error in the menu structure or a bad link on the site this may happen. Say you have a link on the home page to 'Contact Us', but the developer fat-fingers the link and it goes to 'kontackus.htm'. Clicking that link will generate a 404, because 'kontactus.htm' probably doesn't exist.
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If a search engine sends a robot to your site to index it, they frequently request 'robots.txt'. This is a non-required page that tells them what pages you don't want indexed. The default is to index all pages. Since it causes an annoying 404 in the reports, we usually will just drop a blank file into the site.
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Sometimes we'll see repeated calls to non-existent pages (pages that used to be in the site but are not currently) all in the span of a second or two. That's an indicator that a search engine is making a scan of the pages that it thinks you have. Strangely, they'll keep on doing that for some time. I don't know why.
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If someone manually types in an address and misspells it... 'www.mySite.com/hom.htm' (missing the 'e' in 'home')
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If the site changes over time, and a link to a non-existent page exists on another web site, or in the search engine. We see this a lot when we get requests to upgrade the functionality in a web site, because it means changing the page names from '.htm' to '.aspx' so that we can get 'server side' functionality' like database calls or sending email. The answer here is frequently to put the old 'home.htm' back into the site, but have it immediately redirect to the new 'home.aspx'
Repeated calls to nonexistent pages, especially if they end in '.dll', '.exe', or '.cmd' should be cause for worry. Immediately call about that. That might be a hack attempt.
Other than that, 404 errors are just an alert, and can usually be ignored. Repeated calls for the same page can usually be fixed by placing that page on the site and redirecting.