Art requires creative perception both by the artist and by the audience: a cliche comment about some modern art is that "my five-year old child could have painted that." This statement implies that the work is somehow less worthy of the title "art" either because the viewer fails to find meaning in the work, or because the work does not appear to have required any skill to produce.
Thus, the word art connotes a sense of ability, of the mastery of a medium, of the efficient use of a language so as to convey meaning, immediacy or depth. Making this judgement requires a basis for criticism: a way to determine whether the sensory input meets the criteria to be considered art, whether it is perceived to be ugly or beautiful. Perception is always colored by experience, so a reaction to art as "ugly" or "beautiful" is necessarily subjective. Countless schools have each proposed their own ways to define quality, yet they all seem to agree in at least one point: once you have accepted their aesthetic choices, the value of your work is determined by its capacity to transcend the limits of its chosen medium in order to strike some universal chord (which, oddly enough, tends to be the most personal one).
Art also appeals to human emotions. It can arouse aesthetic or moral feelings, and can be understood as a way of communicating these feelings. The artist has to express himself so that his public is aroused, but he does not have to do it consciously. Art both explores human emotions and ways to arouse them - the good art brings something new and original in either of these two respects.
Consider photography: are photographs of un-posed, "real life" to be considered art? The common answer is overwhelmingly yes, even though many of these photographs simply seek to mechanically reproduce what people can see with their own eyes. This is also one of the goals of found art: to recontextualize the art of everyday objects.
Good art communicates on many levels and is open to many interpretations. If returning many times to the same work of art uncovers variations of meaning over and over again, it passes an important test. Great art communicates with people across different cultures and stands the test of time, possibly the ultimate test for any work of art.
A piece of artwork reflects the culture that created it, though this might not be apparent to its contemporary observers. Art depends on context. Available materials, subjects, themes, metaphors, politics, and technology all influence the creation of art. The audience's insight into a work improves as an understanding of the artist's culture grows.
Artistic expression takes many forms, primarily abstract. References are common and important; a strong piece of art is a self-referential system; that is, all parts of the system contribute to the organic integrity of the whole. Extraneous or missing elements are seen to degrade the artistic integrity of the work.
"Pure" art is aesthetic rather than utilitarian. In contrast, design is the process of making utilitarian objects more beautiful. Clothes, parks, and cool-looking automobiles are designed; paintings and sculpture are art. There is, however, considerable grey area; architecture, for instance, falls somewhere in between, depending on the nature of the undertaking. In addition, purely aesthetic objects can be said to have, at the very least, entertainment value, which can be considered useful.
There is no definite limit to what can or cannot be called art; in the end, it is up to the audience. The musician Frank Zappa believed that "Anything can be music, but it doesn't become music until someone wills it to be music, and the audience listening to it decides to perceive it as music. Most people can't deal with that abstraction--or don't want to."