The two newly discovered satellites of Pluto (P1 and P2) have masses that are small compared to both Pluto and Charon-that is, between 5 × 10-4 and 1 × 10-5 of Pluto's mass, and between 5 × 10-3 and 1 × 10-4 of Charon's mass. This discovery, combined with the constraints on the absence of more distant satellites of Pluto, reveal that Pluto and its moons comprise an unusual, highly compact, quadruple system. These facts naturally raise the question of how this puzzling satellite system came to be. Here we show that P1 and P2's proximity to Pluto and Charon, the fact that P1 and P2 are on near-circular orbits in the same plane as Pluto's large satellite Charon, along with their apparent locations in or near high-order mean-motion resonances, all probably result from their being constructed from collisional ejecta that originated from the Pluto-Charon formation event. We also argue that dust-ice rings of variable optical depths form sporadically in the Pluto system, and that rich satellite systems may be found-perhaps frequently-around other large Kuiper belt objects.