Astronomers decided they would make a final decision about the definition of a planet at the XXVIth General Assembly of the International Astronomical Union, which was held from August 14 to August 25, 2006 in Prague, Czech Republic.
For an object to be a planet, it needs to meet these three requirements defined by the IAU:
It needs to be in orbit around the Sun – Yes, so maybe Pluto is a planet.
It needs to have enough gravity to pull itself into a spherical shape – Pluto…check
It needs to have "cleared the neighborhood" of its orbit – Uh oh. Here's the rule breaker. According to this, Pluto is not a planet.
What does "cleared its neighborhood" mean? As planets form, they become the dominant gravitational body in their orbit in the Solar System. As they interact with other, smaller objects, they either consume them, or sling them away with their gravity. Pluto is only 0.07 times the mass of the other objects in its orbit. The Earth, in comparison, has 1.7 million times the mass of the other objects in its orbit.
Any object that doesn't meet this 3rd criteria is considered a dwarf planet. And so, Pluto is a dwarf planet. There are still many objects with similar size and mass to Pluto jostling around in its orbit. And until Pluto crashes into many of them and gains mass, it will remain a dwarf planet. Eris suffers from the same problem.
It's not impossible to imagine a future, though, where astronomers discover a large enough object in the distant Solar System that could qualify for planethood status. Then our Solar System would have 9 planets again.
Even though Pluto is a dwarf planet, and no longer officially a planet, it'll still be a fascinating target for study. And that's why NASA has sent their New Horizons spacecraft off to visit it. New Horizons will reach Pluto in July 2015, and capture the first close-up images of the (dwarf) planet's surface.
Space enthusiasts will marvel at the beauty and remoteness of Pluto, and the painful deplaneting memories will fade. We'll just be able to appreciate it as Pluto, and not worry how to categorize it. At least now you know why Pluto was demoted.