Think about the feeling you get when you look at a picture of a beautiful sunset. Now think about the feeling you get when you look at a picture of people having sex. Two very different reactions, right? Well, erotic art is art that aspires to produce BOTH of those reactions. Subtract the sexual appeal, and you've just got art. Make it ALL about the sexual appeal, and you've just got smut. If art is beautiful pictures*, then erotic art is just beautiful smut.
*Not all art is beautiful in the visually aesthetic sense. Sometimes the purpose of art is to make statements about the world, society, or human nature. In that sense, even images indistinguishable from pornography could be considered art if they are made for any of those purposes above and beyond the pursuit of sexual arousal (although attempting to sexually arouse people in non-standard ways could also be viewed as something of a statement about the nature of human sexuality).
Generally, how much erotic material can be subsumed under the label of art depends largely on your definition of art, but it is reasonable to conclude, regardless, that there is such a thing as erotic art which distinguishes itself from pure pornography in that it aspires to something else in addition to creating an erotic response, whether that something else is aesthetic appeal, emotional value, intellectual meaning, or anything else you consider a legitimate aim for art.
Of course, this is a logical argument; people who complain that "porn is not art" often do so because "art" presumes value, and their opinion is that pornography, being deeply entrenched in the sexual realm, is worthless trash that reflects poorly on those who produce and consume it, and that its existence drags down the quality of society on the whole. Therefore, to call anything sexy "art" is to presume that sexual expression can have 'value' of a presumably socially redeeming quality above and beyond the pornographic appeal. This offends those of a prudish mindset, and is clear evidence that prudes are fundamentally out of touch with reality.
For the rest of us, it is not demeaning to distinguish between porn and erotic art, because the fact is, there are many willing producers and many more willing consumers of pornography who care about one thing only - sexual satisfaction - and efficiency will always trump the effort required to create an artistic product. However, there will also always be people like me, who take a particular interest in erotic art separate from pornography, and I would hope that there will always be people willing to create beautiful pieces of erotic art, avoiding the pitfalls of either succumbing to a total porn mentality or resolving to appease the prudes (for support or sponsorship or what have you) by separating entirely the discipline of art from an appreciation of sexuality.