What the Hell is...Uncanny Valley?
The uncanny valley is a theory that suggests there is a tipping point where people will reject digital or technological representations that appear too similar to human beings. By making artificial movement or speech appear too natural, a robotics or model designer will inadvertently trigger feelings of revulsion. The concept of the uncanny valley initially only referred to robotics, but as computer graphics have evolved, the same phenomenon has been observed in the world of film and video animation.
The movie "Polar Express" was panned, with critics contending that the motion capture process created animated characters that were more disturbing than cuddly. And video gamers have remarked in recent years that digital characters are becoming unsettling.
The idea of the uncanny valley has even been extended to photo retouching, as consumers have difficulty reconciling digitally altered photos with their expectations of a subject's appearance. A recent advancement in photorealistic characters from design firm Image Metrics may have provided an answer by analyzing specific movements and timing gestures.
Origin:
Japanese robotics inventor Masahiro Mori defined the concept in 1970. He was looking to explain why people suddenly rejected his creations as they became more evolved. Mori based his theories on the philosophies of Ernst Jentsch and Sigmund Freud, in which both men expounded on the idea that something can be familiar and unknown at the same time.
Correction: One of our eagle-eyed readers noted that the connection between Mori's theory and the work of Freud and Jentsch was made after his postulate was released. Mori's work was not based on their philosophies, it is just a correlation that has been drawn by subsequent researchers.

Mori based his theories on the philosophies of Ernst Jentsch and Sigmund Freud, in which both men expounded on the idea that something can be familiar and unknown at the same time.
I'd be interested to know your source for this quotation, as there's currently the view among researchers in this area that Mori was not aware of Freud/Jentsch, and this connection occurred post-hoc.
Would you care to let me know why you've made this link?
Many thanks for your time.
Stephanie, we appreciate your insight into the uncanny valley. The source blog entry was here:
http://www.virtualworldlets.net/Resources/Hosted/Resource.php?Name=UncannyValley. We made an incorrect logic leap, thanks for pointing it out.