The Princess Diaries is a Cinderella story, but without the tension readily apparent in the children's fable.
Mia Thermopolis (Anne Hathaway) is a high school kid in San Francisco. Even though she's not the most popular girl in class, she's hardly tormented, and is exposed to a culture that most kids in the world would envy. She is blessed with a stroke of even greater luck when her grandmother, Clarisse Renaldi (Julie Andrews), who happens to be the queen of Genovia, a small country, visits.
Clarisse, who isn't beyond using her subjects' money to throw lavish parties in the midst of an exquisite garden with fountains, asks Mia to follow in her footsteps. At this point, you should keep in mind that Mia has already had a more fortunate life than Eliza in My Fair Lady. Mia isn't sure, but the two of them bond, go through a few ups and downs together, until the movie resolves the issue at the end.
Personally, I'd rather children today learn about why the early settlers of this country gave up the notion of royalty rather than watch this film. This is the kind of crap that encourages people to revere (Princess) Diana more than Mother Teresa (where the thing to do should be to live more positive lives than either of them did). Crazy.