This complexity usually relates to determination of payoff;[1] see option style.
The category may also include derivatives with a non-standard subject matter - i.e., underlying - developed for a particular client or a particular market.
As such, certain derivative instruments have been considered exotic when conceived of and sold, but lost this status when they were traded with significant enough volume.
As regards valuation, given their complexity, exotic derivatives are usually modelled using specialized simulation- or lattice-based techniques.
This latter approach may then be preferred, and also allows for a benchmark against which the more specialized models may be verified.