Device driver:
system software or application software

The answer is System Software.

Explanation:

The Device Driver is considered as a system software. It's like a middle person who communicates to your hardware (computer parts) and your computer's operating system. Without device drivers, your computer parts (like monitor, sound cards, hard drives etc.) cannot function well or will become useless at all.  

To have a further understanding and proof that the device driver is a system software, let's have a deeper explanation on it. Let's say, for an instance, you have plugged in a wired mouse to your laptop or desktop computer. A specific device driver will be search and installed. An object will be created inside your operating system which will be recognized to control the device exclusively. When you press Ctrl key and P key --- which is commonly the shortcut to print a document. The command you have typed will automatically recognized by the printer driver, which will trigger printing of documents.

Application software on the other hand, are type of software which only functions inside the operating system to execute a specific task. For example, you want to create a letter, you can do that using a word processor, which is a type of application software. Another, you want to create a simple payroll computation by creating formulas and mathematical operations. Excel or spreadsheets file can cater that need. Listed below are other types of application software: