Prior to knowing how to do it, a daisy chain always seemed like magic to me; it seems like it's neatly knotted up, but then pull one end and it all comes [neatly] apart.
An additional advantage of doing a daisy chain is that you don't necessarily need access to the ends of the rope/line/cord. In other words, if you have something like a shop-vac, where one end is attached to the appliance, you can still 'daisy chain' the cord (I don't know if 'daisy chain can also be a verb, perhaps the right nomenclature would be 'tie' a daisy chain).
I'm a lefty, so you righties out there may want to mirror this.
Step 1: Find the Middle, Tie a Looped Overhand Knot
Step 2: Loop Through the Knot
Now repeat what you just did.
I used one hand in these pictures to show the routing to show the routing of the extension cord. In the next steps, the cord is doing the same thing (i.e. going through the existing loop in the same manner), but I'm using two hands. As you'll find, using two hands is much easier when executing a daisy chain.
Step 3: Repeat
As the 'new' loop comes through the 'existing' loop, I grab the new one with my right hand, which is carrying the weight of the newly formed daisy chain (as you continue, this will become the heavy end).
The idea is simple: feed some cord through the existing loop to form a new loop.
Step 4: Keep Repeating
Step 5: Terminate the Daisy Chain
You're done - stow the cord!
Step 6: Undoing the Daisy Chain
If you start pulling, but the cord doesn't undo itself (i.e. it tightens down onto itself), you've un-done that last loop wrong. There's only one closed loop holding the entire chain together (ignoring that initial overhand knot that you made in the middle). Thus, each loop should essentially undo itself.
Step 7: Undone Daisy Chain = Ready to Use Cord
I made it at TechShop! An extension cord is no good unless you're going to use it - TechShop has all kinds of fun tools that you can plug into the cord and build awesome stuff with. Check 'em out: www.techshop.ws