Dark matter substructure and dwarf galactic satellites

A decade ago cosmological simulations of increasingly higher resolution were used to demonstrate that virialized regions of Cold Dark Matter (CDM) halos are filled with a multitude of dense, gravitationally-bound clumps. These dark matter subhalos are central regions of halos that survived strong gravitational tidal forces and dynamical friction during the hierarchical sequence of merging and accretion via which the CDM halos form. Comparisons with observations revealed that there is a glaring discrepancy between abundance of subhalos and luminous satellites of the Milky Way and Andromeda as a function of their circular velocity or bound mass within a fixed aperture. This large discrepancy, which became known as the ``substructure'' or the ``missing satellites'' problem, begs for an explanation. In this paper I review the progress made during the last several years both in quantifying the problem and in exploring possible scenarios in which it could be accommodated and explained in the context of galaxy formation in the framework of the CDM paradigm of structure formation. In particular, I show that the observed luminosity function, radial distribution, and the remarkable similarity of the inner density profiles of luminous satellites can be understood within hierarchical CDM framework using a simple model in which efficiency of star formation monotonically decreases with decreasing virial mass satellites had before their accretion without any actual sharp galaxy formation threshold.