Indie is short for independent, which usually means a band that either is on an independent record label (one not owned by the RIAA), or not on a label at all. I'm fairly sure this is the only requirement to be an indie band. Other than that, it's free to interpretation.
Which is funny, because half the bands listed here aren't actually independent, they're either on one of the 5 major record labels, or on a subset of them.
Modest Mouse, Radiohead, Sonic Youth, The Flaming Lips, Suede, The Mars Volta, Placebo, The Pixies, Belle and Sebastian (as of 2003), all are on major record labels, therefore fail the first requirement to be "indie." Granted, yes, they are all excellent bands, but classifying them under indie doesn't really make a whole lot of sense, as they aren't independent.
But then, I believe classifications are part of the problem with the modern music scene. Classifications do nothing but limit.