For resent artificial satellites of unusually low weights and small sizes, new classifications are used to categories them.
The term “Minisatellite” is sometimes applied to an artificial satellite weighing between 500-200kg, though it is not commonly applied as the titles below. Minisatellites are usually simpler but use the same technologies of larger satellites.
Microsatellite or “Microsat” is usually applied to the name of an artificial satellite with a weight below 100Kg (or below 222lbs). Sometimes designs or proposed designs of these types have Microsatellites working together or in a formation.
Nanosatellite or “Nanosat” is usually applied to the name of an artificial satellite with a weight below 10Kg (or below 22lbs). Again designs and proposed designs of these types usually have multiple Nanosatellites working together or in formation (sometimes the term “swarm” is applied) Some design require a larger “mother” satellite for communication with ground controllers.
The reason for miniaturizing satellites is simple: reduce the cost. Heavier satellites require larger rockets of greater cost to finance; smaller lighter satellites require smaller cheaper launch vehicles and can sometimes be launched in multiples. Miniaturized Satellites also allow for cheaper designs as well as easy of mass production.
Micro/Nanosats usually require innovative propulsion, attitude control, communication and computation systems.
Larger satellites usually use Monopropellantsorbipropellant combustion rockets for propulsion and attitude control, these system are complex and require a minimal amount of surface area to dissipate heat. Micro/Nanosats have to use compressed gas, vaporizable liquids such as ButaneorCO2 or other innovative propulsion systems that are simple, cheap and scalable.
Tiny satellites lack the power supply or mass for large conventional radio transponders, and have to use miniaturized or innovative communications systems, such a laser receivers, antenna arrays and satellite to satellite comunication networks.
Electronics need to be rigorously tested and modified to be "space hardened" or resistant to the outer space environment. Miniaturized satellites allow for the opportunity to test new hardware with reduce expense in testing.
http://marsnet.jpl.nasa.gov/index.html
http://www.accessscience.com/ResUpdates/2004/YB_041170_frameset.html?doi