The "uncanny valley" is a term that is being used more recently in gaming with the release of games that are realistic in terms of textures, lighting and filtering, but still mostly unrealistic in complex motions.
The hypothesis behind the term is that there is a point between empathy for non-humans and empathy for humans that creates a feeling of revulsion when someone is interacting with a being that is near human. Confused? Well, for example, in robots, scientists wanted to see what level of realism to human behavior a person would find acceptable. Their research found that robots that were easily distinguishable between humans gave the people interacting with them a certain amount of likeness to them. As the robots got progressively more realistic looking, the positive feelings grew more and more until, at a certain point of realism just before they became completely humanistic, the people interacting with them felt repulsive feelings toward the robots. Once the human look-a-like robot becomes more humanistic in it's expressions and characteristics, empathy for human will emerge. The feelings of revulsion, where emotion take a steep negative dive, are the "uncanny valley".
The theory behind this phenomenon is, that beings that are very non-human are easily noticed as being non-human, whereas near-human beings are noticed only by their characteristics that make them non-human. This creates an unnatural kind of creature that, well, just plain looks off, like that chick in "The Grudge" who crawls down the stairs in that crazy twitchy manner. Ok, not a very good example, but the idea is laid out at least. In robots, this uncanny valley was created when the viewers stopped noticing a robot that was making a good impression of being human, and instead noticed a human who was making a very bad impression of being human.
For those who can't put the pieces of the above paragraph together, the picture to the right, describing it in terms of robots, is easier understood.