More explicitly, the International Astronomical Union (IAU) defines a dwarf planet as a celestial body in direct orbit of the Sun that is massive enough for its shape to be controlled by it’s own gravitational mass (hydrostatic equilibrium), but that unlike a planet has not cleared its orbit of other objects.
The term dwarf planet was adopted in 2006 as part of a three-way categorization of bodies orbiting the Sun, brought about by an increase in discoveries of trans-Neptunian objects (objects that are further away from the Sun than Neptune) that rivaled Pluto in size, and finally precipitated by the discovery of an even more massive object, Eris. Note: Pluto has been measured to be a little bigger than Eris after the New Horizons flyby .
This classification states that bodies large enough to have cleared the neighbourhood of their orbit are defined as planets, whereas those that are not massive enough to be rounded by their own gravity are defined as small Solar System bodies.
Dwarf planets come in between. The exclusion of dwarf planets from the roster of planets by the IAU has been both praised and criticized; it was said to be the "right decision" by astronomer Mike Brown, who discovered Eris and other new dwarf planets, but has been rejected by Alan Stern, who had coined the term dwarf planet in 1990.