A satellite is an object that orbits another object. With sufficient tangential velocity, the object does not collide with the primary object it orbits, but maintains a distance from that object as the rate at which it falls towards that object is similar to the rate that it travels away, thus the object orbits the primary object and becomes a satellite.
Because all objects exert gravity, the motion of the primary object is also affected by the satellite. If two objects are sufficiently close in mass, they are generally referred to as a binary system rather than a primary object and satellite. The general criterion for an object to be a satellite is if the center of mass of the two objects is inside one of the objects.