Just as there are four kingdoms represented by the materials in Nebuchadnezzar’s dream-image in Daniel 2, four kingdoms are also present in Daniel’s vision of the four beasts in chapter 7. Since we find weird creatures, portents of the last days, a supernatural guide and such, this vision is associated with apocalyptic genre.
Saying something is “apocalyptic” is enough in some quarters to designate it non-literal, but comparison of biblical apocalypses with plain prophetic passages strongly suggests that they can refer to the same things, and that therefore apocalyptic texts should not be understood apart from the more straightforward prose of comparative prophetic literature.
Each of the four beasts arises out of the sea (Dan.7:3). This “great sea” (v.2) is not interpreted, but it possibly refers to the Mediterranean, although it has additional value as a symbol for the world, especially in resistance to God (v.17; Isa. 57:20).
The standard opinion of conservative commentators is that the beasts in Daniel 7 represent Babylon, Medo-Persia, Greece (Macedonia), and Rome, exactly as in Daniel 2. I believe this is the correct understanding of the four beasts of Daniel 7:4-7, although I shall have to leave more detailed explanations to the commentaries.
Taking the four beasts as representative of Babylonia, Medo-Persia, Greece, and Rome, we see that the fourth creature has ten horns (v.7), three of which are displaced by another horn which rises later (v.8). This “little horn” has human eyes and “a mouth speaking pompous words.” (7:8).
The “little horn” is seen as “making war with the saints, and prevailing against them” (7:21), at least for a period of “a time, times, and half a time” (7:25b). The “little horn’s” evil progress is stopped in its tracks by the arrival of “one like the Son of Man, coming on the clouds of heaven” (7:13), whose glorious reign over all the nations is never ending (7:14). The saints are given entrance into this last king’s everlasting kingdom (7:22, 27).
From Daniel’s vantage point in the sixth century B.C., there was no way of knowing who this character symbolized by the “little horn” would be. All that could be reasonably ascertained was that (1) this figure would hold power at the time of the fourth kingdom; (2) that he would be a blasphemer who would pursue God’s people (who in this context would have to be Jews), and (3) that his persecution of Jews would be curtailed by the Son of Man who had received the right to rule the earth forever from God (the “Ancient of Days” of vv. 9-10, 13).
Since the four kingdoms which preceded the everlasting kingdom of the Ruler are earthly and physical in nature – and Daniel would not have thought otherwise – the natural conclusion is that the “Son of Man” who comes from heaven (7:13) is a King who sets up His reign upon this earth. This fact is vital for understanding the vision, because it locates the time of eschatological fulfillment at the end of the era of sinful human dominance. It represents a momentous paradigm shift when heaven intervenes in earth’s affairs in an irresistible way.
Just as the “stone made without hands” in Daniel 2:44-45 destroyed the kingdoms of man before spreading throughout the world, establishing an everlasting dominion, the “Son of Man” in Daniel 7:13-14 does the very same thing. He is the Final King, voted in by Heaven.
When we connect this “apocalyptic” depiction with the expectations of a future Ruler elsewhere in the Old Testament (under various names: ‘the Branch’; ‘the Seed’, etc.), there is every reason to think that Daniel is referring to the same personage. See, for example, the references in Numbers 24:17; Isaiah 9:6-7; 11:1-10; 32:1f.; Jeremiah 23:5-6; Micah 5:2. The fact that later Jesus Christ quoted this very passage from Daniel 7 at his trial (Matt. 26:64. Cf. Matt.24:29-31), where He was plainly alluding to His second advent, shows both that He is this coming Ruler, and that the “little horn” will be defeated by Him at His second coming.
In Daniel 7:24 we are told that the ten horns on the fourth beast are “ten kings who shall arise from this kingdom.” Presumably all ten arise at about the same time, because three of them are subdued by the appearance of the eleventh king, that is, the “little horn.” This would not be possible were Daniel referring to ten kings who reigned successively. The next verse which focuses on the king who is the “little horn” again speaks of his blasphemous mouth, and about his vendetta against God’s people. For Daniel and his ancient readers, these “saints of the Most High” would be Jews.
 See Collins, The Apocalyptic Imagination, 98-107
 Cf. Ernest Lucas, Daniel, 177-178
 Although there is some circularity in the views of both conservatives and liberals here. For the later, note Lucas, Ibid, 76
 Some evangelicals, although veering to the more liberal end of the spectrum, have mounted arguments against the traditional understanding. For a brief review see Willem A. VanGemeren, Interpreting the Prophetic Word, 345-347. For a good defense of the traditional identifications of the kingdoms see E.J. Young, The Prophecy of Daniel, 143-147, 275-294.
 The fact that a horn of the beast represented a king points to the fact that the beasts themselves should be seen as kingdoms.
 “Confessedly the Christian is inclined to look at this vision through the spectacles of NT eschatology, and through those spectacles the little horn well answers to the period of the Antichrist before the return of Christ (2 Thess.2:3-4).” – C. Hassell Bullock, An Introduction to the Old Testament Prophetic Books, 357