A homunculus (plural: homunculi) in Haunting Ground is an artificial human or humanoid created through alchemy. There are also descriptions of what appears to be cloning in actual documents related to alchemy, and it seems as though alchemists also investigated what is now known as biology.
In traditional folklore, mandragora are considered a form of homunculi.
Aureolus Belli was able to realise his goal of immortality by transferring Azoth, the essence of life, to a homunculus that duplicated his physical qualities, creating a "complete clone" of himself, and passing his knowledge and mission to it. Ugo Belli was a clone himself, but met Ayla and decided to live as a simple human, eloping with her and renouncing the inheritance of his Azoth. Avoiding the pursuing alchemist, he lived for the next twenty years in peace.
Lorenzo Belli, who can be considered a homunculus himself, created several incomplete homunculi, which now run amok in Belli Castle. Lorenzo's clone/son, Riccardo Belli, is a homunculus who created another homunculus, Debilitas, using a dog's placenta as a base, although Debilitas turned out to be a failed creation. A misconception is that Daniella is a homunculus when this has never been officially proven - official evidence only says she is "living". The reason why she said "My creator said he made me the perfect woman" is probably because she thinks she is a "mechanical doll" created by Lorenzo, rather than a homunculus.
The incomplete homunculi can be found as deformed babies, or grey humanoids with white eyes. The "adults" are completely harmless and will do the same thing continuously (lick the floor, smash its head against the wall, admire art, etc.), unless disturbed by Fiona Belli. Then they will powerfully swat her away.