Princess: The title given to the daughters and granddaughters of the sons a reigning monarch.
Charlotte is one of three great-granddaughters to the queen, but the only one with a princess title. The queen has three sons—Charles, Andrew, and Edward—and only their children, grandchildren, and so forth can be given the titles of Prince or Princess. This means Peter Phillips and Zara Tindall, the children of Princess Anne (given the upgraded title, Princess Royal) do not have royal titles, nor do their kids.
Kate is technically a princess by marriage (HRH Princess William of Wales—think of it like a last name) but she will never be referred to as "Princess Kate."