Cleared an Orbit
The distinction between dwarf planets and traditional planets are that dwarf planets do not have enough gravity to clear their orbit around the sun from other celestial bodies. Most planets defined or cleared their orbit in the early days of the solar system by pushing other bodies away or absorbing them. Dwarf planets, like Pluto, keep company with a host of other similar-sized objects that share their orbit around the sun.
Orbits the Sun
Both dwarf planets and planets must orbit the sun (or another star) but cannot be a satellite. A satellite is defined as a celestial body orbiting another planet. The moon, for example, is a satellite that orbits the Earth. Pluto itself has three moons.
Sufficient Mass
Both planets and dwarf planets must have sufficient mass to be nearly spherical in shape. The reason planets are spherical is gravity. Gravity is as a force that points inward toward the center of the planet so that every part of the surface is pulled evenly toward the center, resulting in a spherical shape. Smaller objects, such as asteroids, are not spherical in shape because they do not have sufficient gravitational forces.
Plutoids
To help ease the demotion of Pluto, IAU recognized Pluto's special place in our solar system by designating dwarf planets that orbit the Sun beyond Neptune as plutoids. Eris, which orbits far beyond Neptune, is known as a plutoid.