What is Wordsworth's theory of poetry?

In the first statement of the 1802 edition, Wordsworth says the poems in Lyrical Ballads are an experiment of "fitting to metrical arrangement a selection of the real language of men in a state of vivid sensation." So, one of the goals that Wordsworth has with this collection of poems is to use real language. In other words, he wants to make poetry from the language that people actually use. This was an attempt to get away from the formal style of his predecessors, namely the Neoclassical poets such as Alexander Pope. And the "vivid sensation" appeals to the poet's provocation of emotion rather than the more rational style of something like Pope's "An Essay on Man." 

Wordsworth also focused on the common man and this goes along with his focus on real or common language. Now, his poetry is still poetic, so to speak, but it was a shift from poetry as a formal, structured poetics to something more common and emotive. He wanted to explore how ordinary events and feelings could be understood in extraordinary ways. He chose to focus on rural settings and people and to explore their feelings "because the manners of rural life germinate from those elementary feelings; and, from the necessary character of rural occupations, are more easily comprehended, and are more durable; and lastly, because in that condition the passions of men are incorporated with the beautiful and permanent forms of nature." Thus, Wordsworth also was enchanted by the emotive and transcendent power of nature. The natural world, the rural lifestyle, and the realness of language and feelings were all inspirational elements for Wordsworth's new theory of poetry. This is why Wordsworth could write a poem about a cloud in which he contemplates nature, his existence, and his role as a poet. 

Since Wordsworth was tapping into "real language" and more common subjects (rendered in imaginative, extraordinary ways), he notes that some of his poems might be as easily read as prose. He is not trying to erase the line between prose and poetry, but he is illustrating how his brand of poetry does utilize a more free, prose style while still presented in poetic verse. And he notes that any subject is more likely to be read in poetic form, " . . . the one in prose and the other in verse, the verse will be read a hundred times where the prose is read once." Such is the accessibility of poetry and such would be the accessibility of Wordsworth's subject matter: common life and language. 

Lastly, Wordsworth's theory about writing poetry is often summed up as writing from the spontaneous overflow of emotion reflected in tranquility. The poet should contemplate the simple things, nature or rural life, but he should allow himself to be emotionally affected by the deep significance of such things: 

I have said that Poetry is the spontaneous overflow of powerful feelings: it takes its origin from emotion recollected in tranquility: the emotion is contemplated till by a species of reaction the tranquility gradually disappears, and an emotion, kindred to that which was before the subject of contemplation, is gradually produced, and does itself actually exist in the mind.