Tilt is a state of aggravation. It is loosely defined as a situation where you are playing suboptimally as a result of an unbalanced emotional state. The state is usually induced by a big loss, a bad play from the opponent that made a profit for him, and/or boredom. As a result, the player frequently starts to go too far with air (weak cards), pull off big bluffs in an attempt to "get his money back," and call down too much with mediocre hands - in poker, this is just bleeding away money. The word "tilt" also makes physical sense, because a player on tilt is likely to lose even more money and go on even more tilt as the result of suboptimal play his original tilt induced, a cycle of chaos that pushes itself until the player loses it and goes into "mad monkey tilt," which I do not need to define.
One universal truth about tilt is that all players experience it, even extremely skilled and successful (these two are not necessarily the same thing in the poker world) players, and that they tilt for different reasons. I think there are three levels of "tilt-inducers" in poker, depending on the player's ability (seeing that the my main form of poker is (shorthanded) No-Limit Hold'Em, I will use examples from that game for my argument - very convenient since it is the most recognizable game right now. Thus, every time I refer to "poker" I'll actually be referring to the above game).
The most basic inducer of tilt is falling in love with "big" preflop hands. In poker, pocket aces or kings are very strong hands before the flop (community cards) are dealt, but their strength can fall dramatically and be overtaken by even 2-3 offsuit, the weakest heads-up poker hand. A recognizable mistake that beginners will make is that they'll be oblivious to continued aggression from the opponent after the flop is shown to be extremely dangerous (such as, say, a 789J3 board, with three hearts), and they'll continue to bet and call big raises (the latter is more of a sin than the former) all three streets with AA. Then, when they lose, they get angry that their opponents "sucked out" on them, completely disregarding facts such as pot odds, preflop play (they frequently would have incorrectly slowplayed AA preflop, for example, letting speculative hands such as 78 come in for cheap), etc. Almost always, right after a player loses a big pot in this fashion, they will go on tilt and steadily lose the rest of their stack with much more speculative hands, still played incorrectly, to "right" some sort of injustice incurred upon them.
Among more seasoned poker players, players complaining about AA being "broken" and whatever are immediately classified as signs of a weak player, because everyone recognizes the above situation. Even these players go on tilt though - the funny thing is they probably no longer tilt when they lose with KK or AA. Rather, they tilt frequently when a weaker player makes an incorrect play and defeats them in a pot. An example is a player attempting to bluff out a weaker player on a, say, 79T3A board holding rags (say 45) by betting all three streets, but the weaker player catches a 3 on the turn with 34 and calls a huge river bet. Here, the player goes on tilt not because he had good hands - far from it - but because he expected value out of his river bluff since most reasonably skilled players would fold the weak pair of 3s to a river bet after seeing so much aggression. Thus, the cause of tilt here is that one of his (otherwise correct) plays failing rather than his hand failing.
Finally, among the much better players and pros, the above forms of tilt are rare. They are used to the fact that strong hands can become weak and should be folded. They are also used to the fact that bad players will make bad decisions that defeat your good play (a common fact by itself that I think I can be summarized as "yomi 1 beating yomi 3" when we use yomi-style analysis). But their tilt comes when they play for a prolonged time against weaker opposition (whether a single player or a whole table of weak players), and the weaker opponent comes out ahead. Here, they expect to win because they expect their edge in the game to realize itself over time after repeated trials. When this is not realized, tilt is caused by the failing of his superior game over the opponent's game, and even the great players will start making very suboptimal moves.
Tilt is not particular to poker. In particular, I will take Street Fighter as my counterpoint. A good analogy to the first-level tilt-inducer: when a weak player performs a special move (such as a fireball), they expect the move to come out. However, it is easy to whiff the fireball motion and get a punch motion out instead. This may put the player on "tilt": frustrated (and frequently blaming the joystick or the music or God), the player will often usually attempt a fireball again just to "prove" to himself and/or his opponent that he can do it, even if the situation is no longer correct for a fireball. This expectation can be exploited by a thinking player, who will see a punch at medium distance into air, a move that has no reason to be performed besides being a whiffed fireball - and jump in without fear of retaliation because the opponent will probably throw out another fireball instead of thinking about anti-air. Seth Killian mentions this in one of his SRK.com posts as an important piece of knowledge to many tournament players. The other analogies are obvious - we get in horrible moods when the combos we practiced at home just refuse to come out; we throw out a psychic DP against the "obvious" roundhouse, but the n00b doesn't think about throwing the roundhouse and simply throws us after our DP whiffs; most of all, we get extremely angry with ourselves when n00bs somehow defeat us round after round even though we have been using "superior play," not realizing that our angry play has become "n00b-y" play already.
So my thesis? Tilt is created when we put too much faith in X, where X is an edge that we think we have. The edge could be on the execution level, the tactical level, the strategic level, or even the emotional level (yes, I have gone on tilt believing that my edge in tilt-control is better than that of the opponent). Tilt happens when we overestimate one specific edge and it fails us. We then feel we were cheated: cheated by the hours we put in learning the game, cheated by the teachers who taught us, cheated by life in letting a newbie defeat us and thinking that he is superior to us for the rest of his life... these are frequently not true - and seriously, why do you care what the newbie thinks??? It is rather silly though when we look at it objectively. No good player "should" always beat a bad player - while some of us may believe a benevolent deity is looking down at us and making sure the "better" player always wins, just look at any sport upset story. The only thing fair is mathematics - in the long run, *if* you have an edge, it will catch up and average out giving you more wins than an unskilled player.
So what did I learn from playing poker and thinking about tilt? Simple. Recognize that no game has its entire outcome based on skill . If this were true, than any chess or go game involving X matches should never end in anything other than a X-0 win or an 0-X loss (or maybe X ties for you nitpicky types). This simply doesn't happen, even among the best players of the craft. So take a step back, relax, and just focus on improving your skills rather than tilting off whatever edge you may have had. In the case of poker, it is also good for your wallet.