What is the uncanny valley?

The uncanny valley refers to a psychological hypothesis in modern 3D digital animation and robotics often attributed to Masahiro Mori , though its ideological roots can be found as far back as Sigmund Freud. The theory proposes that when an animated or robotic model replicates a human being to almost near perfection, it can too closely resemble a human being. At this point, when a human observes the model, they will feel revulsion. Moreover, the human reaction occurs on a gradient scale, so that as a model becomes more human-like, the observer has a more positive reaction; however, after a certain point, the human reaction quickly changes to a strong sense of revulsion. For example, C3P0 elicits a positive response from most people familiar with Star Wars, but many people react negatively to porcelain dolls (which completely freak me out, by the way) As seen on this graph from wikipedia.org, a sharp dip, or "valley" signifies the sudden shift in emotional response.