Unrealistic expectations are expectations, hopes, dreams, and ideas one has that are just plain not going to happen. Walking up to the most beautiful model on earth and having her instantly fall madly in love with you is an unrealistic expectation. Thinking that your new super-cool, hip, neato web-site idea is going to make you richer than Bill Gates, literally is an unrealistic expectation. Jumping out of a plane and assuming you can fly, is an unrealistic expectation.
Unrealistic expectations can be very damaging when they are not fulfilled. They can result in an ego shattering, and a general sense of failure that is not deserved.