A person who lacks social skills. Drawn to anti-social hobbies (video games, reading, role-playing) as a result. Generally believe their unpopularity stems from them being smarter than the rest of us, that they'll grow up to be Bill Gates, etc. In fact, nerds are usually the least well-equipped to deal with life outside of school, and even when they do possess intelligence, still aren't smart enough to learn to express their intelligence in more acceptable ways, i.e. like all the smart people out there who aren't nerds do.
The reason you're a nerd isn't because you're smart, it's because you're retarded.