Filler episode
Filler episodes are used by anime and other TV shows to extend the time between the major story arcs.
Purpose
In manga-based anime such as Naruto, fillers have been used to put distance between the anime and its source material, preventing an overlap which would cause trouble for both forms of the series. Filler episodes may follow a formulaic (and often predictable) plot, loosely based on a main episode, which will either enter the backstory of a certain aspect of a show (such as Rainbow Crystal saga of Sailor Moon's first season) or tell a completely new tale involving the main or supporting and even one-shot characters from previous episodes. (The Garlic Jr. saga of Dragonball Z revisits the events that happened in its movie Deadzone.) Fillers also may introduce aspects that may complement or contradict the canon of the original source. It is not uncommon that whole story arcs comprised of filler episodes will be used within a series in order to fill an episode count and subsequently build up to a main story arc.
In Pokémon
In the case of Pokémon, the Orange Islands episodes are a filler arc, mainly used to delay the beginning of the Johto saga until Pokémon Gold and Silver had been released.
Infamously, the third, fourth, and fifth seasons set in the Johto region are comprised of seemingly endless amounts of filler episodes with formulaic plots based on previous episodes. The arcs also served as a way to buy time for the releases of Pokémon Ruby and Sapphire and were possibly used after the GS Ball, which was planned to consume a large portion of Johto's story, became a useless plot device. It is sometimes thought that the Johto seasons have led to decline of the Pokémon anime itself, often referred to as the point when the series "jumped the shark".
When the Advanced Generation series started, filler episodes were reduced due to the introduction of Pokémon Contests, causing many fans to declare it the best of the anime's arcs. As with the Kanto saga, however, Hoenn was followed by a filler arc, Pokémon: Battle Frontier, which built up for the arc corresponding to Pokémon Diamond and Pearl.
With the Diamond & Pearl series on the air, some fans speculate that this arc will be another Johto-like arc, due to many filler episodes taking place, with Ash Ketchum having 6 badges and Dawn having 4 ribbons out of the more than 100 aired episodes so far in Japan. Like Johto, it may be directly followed by the next region, instead of by a filler season.