What is this "mutual intelligibility" criterion?

Mutual intelligibility is a property exhibited by a set of languages when speakers of any one of them can readily understand all the others without intentional study or extraordinary effort.

This is the principal linguistic criterion for distinguishing a dialect from a language. That is, if two speakers can understand each other, then they are speaking possibly different dialects but dialects nonetheless of a single language; otherwise they are speaking different languages.

It should be noted though that in the definition, lack of intentional study or extraordinary effort is important; thus, even if a Cebuano can understand a Tagalog speaker and vice-versa (each using his own language) this doesn't satisfy the criterion of mutual intelligibility since the Cebuano has been forced to study Tagalog (as the subject "Filipino" in schools) and the Tagalog can only understand the Cebuano if he exerts effort.

The criterion of mutual intelligibility is not always perfect. Since no satisfactory distinction can be made, most linguists do not usually split hairs whether speech variety X is a dialect of language L or another language L2.