What is yajna or yaaga or homa?

• Yajna or homa or  yaaga means nothing but sharing with others (sacrifice)– god, ancestors,nature and living beings, with love and compassion but with out ego.{"The term YAJNA (Yagna) is derived from the root YAJ, meaning sacrifice or worship." - Panini 6-40, 120}

So long as man identifies himself with his body, he is always trying to take, to absorb, because the body continues only by such taking and absorbing. 

When he identifies himself as the Self (Atman) he is always trying to give, to pour out, because the joy of the Self  is in the forth pouring. 

On the Pravritti marg he takes;   on the Nivrtti marg he gives.

Is it right to sacrifice animals in yajna?

No. its wrong and is a great sin. The destruction of creatures can never be said to be an act of righteousness.

What are five great daily sacrifices one should observe?

 There are five great daily sacrifices that are to be performed by every householder. 

 1. Brahma Yajna or Veda Yajna -Teaching and studying scriptures is Brahma Yajna

2. Deva Yajna- Sacrifice to the celestials. (Homa or oblations into the sacred fire is Deva Yajna)

3. Pitri Yajna- Sacrifice to the manes.(Tarpan or offering of water to the ancestors,and Sraddha.)

4. Bhuta Yajna - Sacrifice to all the creatures. (Offering of food to all creatures is Bhuta Yajna)

5. Manushya Yajna -  Sacrifice to man. (Hospitality to guests is Manushya Yajna or Atithi Yajna)