While this is not going to be near such a scholarly post as Celso's (well done, by the way), I would like to explore a bit why Aristotle believed imitation to be one of the two deep instincts from which plays and art spring.
First, imitation. What is it in humans that so enjoys watching people pretend to do things that they themselves do every day? Let's imagine for a moment a scene in a play where an actor cooks dinner and sets the table. If it's done in a manner comparable to reality, with all the quirks and habits and idiosyncrasies that mark human behavior, we buy into the story and at the same time objectively say, "Well done." If two characters have an argument on stage and one of them starts to cry, I know I for one am impressed that the actor is crying "real tears" and at the same time feel sympathy for the character. Perhaps it is because for a few brief moments we see ourselves in the actors and can take an objective view of how we really are. Imitation reminds us of the universal traits of humanity, never more so than when the actions on stage are very specific.
On the other hand, we also immensely enjoy watching people imitate a reality that we ourselves will probably never experience (and these types of stories tend to pop up pretty frequently in theater and literature.) For example, the revenge story, where we watch the wronged hero take his long-awaited revenge on the dastardly villain. It's very satisfying, especially for those of us who have some deep-seated grudges that need to be disposed of. Then, the love story, where the lovely heroine is swept off her feet and rescued from peril by the gallant knight (more often figuratively than not). Inevitably, we identify ourselves with one of the characters to vicariously experience the fairy tale. And as the actors imitate "what may happen", we find ourselves secretly imitating the imitators in life, who in their turn imitate us.