Because of Britain's history and association with colonies and territories, its citizenship and national policy is rather complicated. For example, there are six different forms of British nationality. Being an actual British citizen is one of them. British citizenship is the only way any British national can apply for and get a British passport and live legally in Britain without any special permission to do so. All other British nationals have to obtain permission to live and work in the United Kingdom, unless there are special circumstances in which they are permitted to register as actual British citizens.
First, let me explain clearly that one may be a British citizen in two major ways. The simplest way so far is by "descent". This is gained when one's parents are British citizens, this type of citizenship can not be passed on to your own children. The second and more complex form of being a citizen of Britain is called "otherwise than by descent" sounds kind of funny right? This citizenship is gained in your own right, this is the kind of citizenship you can pass on to your children. Trust me this is really how it is.
Now for those of us who have no British aunts or grand-uncle's friend's mother to adopt us, we can try to obtain British citizenship through NATURALIZATION. If you are eighteen years or older and have lived in the United Kingdom for the last five years or more legally and have not been out of the U.K. within those five years, if you can communicate in English, Welsh or Scottish Gaelic, if you have "good character", and you meet the residential requirements you may be able to apply for naturalization as a British citizen. Eventually when you are really deep in the process you will be tested on how well you know about living in the United Kingdom and you will need to have read a book about life in the U.K. which is recommended to pass your test. This Kind of citizenship if obtained can be passed to your children and this is an example of what the term "otherwise than by descent" means in the British "immigration language".
MARRIAGE. This is the most common. If you are married to a British citizen or a European Economic Area (EEA) national and you have lived in the U.K. for three years or over you may apply for naturalization as a British citizen. Intense interviewing and proof of genuine union is required.
Another option is REGISTRATION. This is when other British nationals who are not yet citizens get to register as British overseas citizens, British protected persons or British subjects with no other nationality or if you were born in the U.K. to a British mother before 1983 or born on or after 1983 and have lived in the U.K. for 10 years or more. This is another example of "otherwise than by descent" because you will be able to pass this kind of citizenship to your child.
Finally citizens of European Economic Areas (EEA) like Italy, France, Germany, Poland, Hungary, Iceland, Irish Republic and many more and their family members can pretty much be considered British citizens when they live in Britain because they have every privilege a British citizen has.