A satire is a comic work that criticizes negative elements of society, individuals, government, or other entities. Techniques such as exaggeration, parody, and irony are common tools used by satirists to make their points. The goal of the satirist is usually to draw attention to what he or she believes is wrong with society in order to make people more aware of it and thus bring about change.

Gulliver's Travels is a classic satire from one of the greatest satirists of all time, Jonathan Swift. All of the bizarre lands that Gulliver visits are satiric looks at real-world vices and foolishness. For example, Lilliputian society is torn apart over a disagreement regarding which end of an egg should be broken while eating it. This trivial matter is a satire of the religious conflicts between the Protestants and the Catholics in Europe, which was very active when the novel was written. The satire comes from painting the dispute as meaningless and not worth the hostility that it engenders. That the Lilliputians are small people with a massive sense of ego-driven superiority is also satiric fodder, suggesting Swift feels that normal human beings view themselves in much the same unjustifiably bloated way.

Throughout the novel, Swift mocks several other human vices: needless cruelty, obsession over scientific advancement without applying it to practical use, and how amoral, cold reason can be when taken to its logical extreme. While some have viewed Swift's satire as excessively misanthropic, others perceive Gulliver's Travels as an epic of satire which is still prescient and true to the worst of human nature.

Why is Gulliver's Travels a satire?

Gulliver's entire adventure is a series of satirical treatments of various human conditions.  Swift agreed with the somewhat prevalent (in Europe and England) view of man as fallen due to original sin.  There are any number of sections of the book where he points out the flaws in the human character, perhaps most scathingly on the island with the Yahoos and their absolute inability to do anything but delve deeper into vice and sin.

Swift also satirized political events of the day, using the Lilliputian governer as an example of the most horrible kind of ruler, petty and misguided and seeking only to increase their own image and power at the expense of everyone but their cronies.

Why is Gulliver's Travels a satire?

In a satire, an author tries to point out things that are wrong with people or with institutions.  The author does so through ridiculing the things that he thinks need to be corrected.

In this case, Swift is ridiculing various things, but most especially the political and religious disputes of his time.  This can be seen in Gulliver's time in Lilliput.

Swift shows that he thinks religious disputes are silly, for example, by having Lilliputians fighting over which end of an egg to open.  He ridicules politics by having positions of power won by whoever can be best at gymnastics.

So he is pointing out what he thinks are flaws in the system by ridiculing those flaws.  That makes it a satire.