Why are things conscious?
Disclaimer: there is a very large amount of literature on the subject and I am in no way expert enough to properly review it here.

In any case, here's a few papers that review the issue and may serve as a basis to look up other references

Evolution of consciousness: phylogeny, ontogeny, and emergence from general anesthesia - Mashour and Alkire, PNAS 2013


  We propose that the stepwise emergence from general anesthesia can serve as a reproducible model to study the evolution of consciousness across various species and use current data from anesthesiology to shed light on the phylogeny of consciousness. Ultimately, we conclude that the neurobiological structure of the vertebrate central nervous system is evolutionarily ancient and highly conserved across species and that the basic neurophysiologic mechanisms supporting consciousness in humans are found at the earliest points of vertebrate brain evolution.
  [...]
  The distinction between phenomenal and access consciousness was noted, but phenomenal consciousness itself reflects the dissociable neurobiologica processes of awareness and arousal. Awareness refers to the content of consciousness (red apple vs. blue sky), whereas arousal refers to brain activation and level-of-consciousness (alert vs. drowsy vs. asleep vs. anesthetized). A number of current theories about consciousness propose that the cortex is the primary site containing the neural correlates of awareness, whereas midline subcortical brain structures provide ascending arousal influences to the cortex


This is also reviewed in this paper:

Subjective experience is probably not limited to humans: the evidence from neurobiology and behavior. - Baars, Conscious Cogn., 2005 


  Thus consciousness is not a metaphysical absolute, but a scientific construct like any other. In humans, the standard behavioral index of conscious cognition is accurate or verifiable report. It has been used scientifically since the beginning of psychophysics in the 1820s. Accurate report is highly reliable, but of course it is subject to limitations like any other empirical measure (Baars, 1988).
  [...]
  In humans the thalamus and cortex are crucial for supporting the contents of consciousness (Edelman &amp; Tononi, 2000). Thalamus is often considered to be an extension of cortex, an added sandwich of interacting layers that controls most traffic to and from cortex. Local damage to cortical sensory regions, like the fusiform gyrus for face perception, results in a loss of conscious knowledge about faces but not about other visual features like color, location, or size. If the intralaminar nuclei of the thalamus are lesioned bilaterally, the conscious state is lost. By comparison, large lesions to cerebellum, basal ganglia, and spinal cord do not impair either conscious contents or state. Cerebellar damage can cause paralysis but not loss of consciousness. Lesion evidence on these points is supported by stimulation experiments using electrodes, transcranial magnetic stimulation (TMS), and microdialysis. It is also reflected in functional brain imaging. The evidence is therefore very strong that the T-C system supports consciousness. That is why many neuroscientists consider the T-C system to be the “seat” of conscious experience, and have done so for at least a century.


Again, citing from the first paper:


  The recent experiments with general anesthesia in humans suggest that phylogenetically ancient structures in the brainstem and diencephalon—with only limited neocortical involvement—are sufficient to support primitive consciousness. Where, then, does consciousness arise on the evolutionary timeline? One might be tempted to conclude that consciousness commenced as our mammalian ancestors evolved just beyond reptiles and their predominantly subcortical brains. However, paleontological findings suggest that the synapsid line that gave rise to mammals and the sauropsid line that gave rise to reptiles and birds both diverged from the primitive anapsid line at a single point ~315 million years ago. Furthermore, there is significant evidence that avian species are capable of higher cognition and even consciousness itself. For example, birds demonstrate evidence of explicit episodic recall (i.e., conscious memory of an event) and theory of mind (i.e., attribution of subjective mental events to another being). Thus, it would be misguided to try to identify a single point at which consciousness emerged because evidence suggests that consciousness evolved along two independent lineages.