Not all laughs make it to Never Land in one piece. Sometimes a piece of laugh breaks off along the way, and the resulting fairy is what Never fairies term "incomplete." They might be missing the tips of their ears, only half of their bodies might glow, or they might think "chicken" rhymes with "mattress." Some fairies think that Iris is incomplete because although she is a garden-talent fairy, gardening does not come naturally to her and she has to write down what other garden fairies know by instinct in a journal.
Compare fairy siblings, where a broken laugh forms two or more complete fairies.