We use high-resolution cosmological simulations of Milky Way (MW) mass galaxies that include both baryons and dark matter (DM) to show that baryonic physics (energetic feedback from supernovae and subsequent tidal stripping) significantly reduces the DM mass in the central regions of luminous satellite galaxies. The reduced central masses of the simulated satellites reproduce the observed internal dynamics of MW and M31 satellites as a function of luminosity. We use these realistic satellites to update predictions for the observed velocity and luminosity functions of satellites around MW-mass galaxies when baryonic effects are accounted for. We also predict that field dwarf galaxies in the same luminosity range as the MW classical satellites should not exhibit velocities as low as the satellites because the field dwarfs do not experience tidal stripping. Additionally, the early formation times of the satellites compared to field galaxies at the same luminosity may be apparent in the star formation histories of the two populations. Including baryonic physics in cold dark matter (CDM) models naturally explains the observed low DM densities in the MWs dwarf spheroidal population. Our simulations therefore resolve the tension between kinematics predicted in CDM theory and observations of satellites, without invoking alternative forms of DM.
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