What makes a story tragic is not only what kind emotion it incites in the reader's heart. Most people mistakenly associate tragedy with sadness or pessimism. A tragedy goes beyond emotions to reach pathos --- an identification with the character's worldview, and to suffer, in vicarious ways, like she suffers. For example, a story of a soldier killed in a war is sad, not tragic. But a story of a soldier killed in a war despite her heroic effort to end the war can be tragic, if it includes other elements of a tragedy.
The important thing about the plot is not what the characters feel but what they do. Feelings are secondary. They do not trouble the writer of tragedies because they are the byproduct of the action in the story. According to Aristotle's "Poetics," the plot must contain three basic elements: a unity of plot, peripety and discovery. Unity of plot means all action must be relevant, probable and believable. Peripety means a reversal of fortune by the end of the story, and discovery means the main character gains a new understanding of her situation, something she didn't know before.
A Tragic Flaw
The tragic flaw is a trait in the main character in the story that leads to her destruction. It is responsible for foolish or unfortunate --- generally bad --- actions, which in turn arouse tragic emotions of pity and terror. It does not have to be a bad quality. A good quality taken to extreme, such as pride, can count as a tragic flaw. The main character commits a mistake either consciously, such as Othello, or unconsciously, such as Oedipus. Aristotle stipulated that the tragic hero should be of noble birth, a man who is essentially good but makes a great mistake that leads to his downfall.
An essential quality of a tragedy is that it arouses emotions of terror and pity. But by the end of the story, the reader is purged of the negative emotions and feels rejuvenated. Aristotle called this purification of the soul catharsis. Nobody knows for certain why tragedies are cathartic, although psychologists claim that by showing us that terror can be overcome, it prevents the subconscious from developing neurosis. Contrary to Aristotle, Nietzsche claimed that cathartic experiences prove we can celebrate life even in --- not despite --- great suffering.
Tragedy in Modern Times
Although Aristotle's "Poetics" still remains the starting point in discussions about tragedy, this art form has evolved over the millennia. Along with democratization of the political sphere, modern writers of tragedies have turned their gaze on the plight of the common man. "The commonest of man take that stature," wrote Arthur Miller, speaking of the tragic stature that was once attached only to the royal or the noble-born. For Miller, a story becomes tragic when the common man, to gain his dignity, fights against his world and circumstances, despite all odds against him, and loses.