Daggy means passe, dorky, or unfashionable. It could also be used to refer to a sheep's butt. A dag is a daggy person, but is also a piece of wool stuck to a sheep's rear with shit and mud, usually with blowflies if you are lucky.

Note, The Macquarie Dictionary states that daggy is colloquial for 1. dirty, slovenly, unpleasant (which describes the sheep's butt well) and 2. conservative and lacking in style, esp. in appearance