"Fascinating! Ingenious, really, how many ways Muggles have found of getting along without magic!" 
          -- Arthur Weasley

"Bless them, they'll go to any lengths to ignore magic, even if it's staring them in the face..."
     -- Arthur Weasley

Muggle Places
People

"Muggles" are non-magical people in the parlance of the Wizarding World. Muggles are for the most part oblivious to the entire society of magical people which exists alongside their own. Part of the reason for this is that Muggles simply don't believe that magic exists, which means they find non-magical reasons for the things that happen to them [1]. Another part of the reason is that the Ministry of Magic works very hard to keep the Muggles in the dark. When a Muggle sees a dragon, for example, the Ministry sends operatives called Obliviators to use Memory Charms to make the Muggle forget all about it. The Ministry hides some Wizarding places with Muggle-repelling charms; this is why Muggles don't see Hogwarts for what it is. Many Witches and Wizards look upon Muggles kindly, but some see Muggles as nothing but a nuisance and a bother. The Ministry enforces a Muggle Protection Act to ensure that all of the Wizardling World stays securely hidden from Muggle eyes. To most Witches and Wizards, Muggle society is essentially unknown. When they try to act like Muggles, the results can be humorous indeed. Hogwarts teaches a class called Muggle Studies where students learn about the ways that Muggles live and how they survive without magic.

1 - "Why would anyone bother making door keys shrink?" said George.
"Just Muggle-baiting," sighed Mr. Weasley. "Sell them a key that keeps shrinking to nothing so they can never find it when they need it...Of course, it's very hard to convict anyone because no Muggle would admit their key keeps shrinking--they'll insist they just keep losing it. Bless them, they'll go to any lengths to ignore magic, even if it's staring them in the face...But the things our lot have taken to enchanting, you wouldn't believe--" (CS3)