The quote is of disputed origin and sometimes attributed to Eleanor Roosevelt, but there is definitely wisdom in these words. Talking about other people is a small minded pursuit.
Still, we would likely be hard-pressed to find anyone that has never done so at one time or another. Have you ever repeated something you heard about another person, yet did not know first hand? Or simply listened to someone else doing so? Most people can't claim to be blameless on this count.
So why do we do this? Here's some speculation based on my own experiences.
Boredom: Some simply can't think of anything better to discuss. Perhaps they've run out of things to talk about with their friends because don't have much else going on in their lives. For some it's because they just plain spend too much time together and have exhausted all other topics.
Envy: Some look for flaws in others because they lack confidence in themselves.
Ignorance: A wise man once explained that when hurt by another person we must consider: Was it out of ignorance, or malice? Most of the time, people gossiping about others are doing so out of ignorance. They don't realize how hurtful and harmful their words can be. Rarely is it done with malicious intent.
These are just a few reasons that people talk about others, but there is a common thread here: It's all about the gossipers and what's going on inside of them. It's not really about the subject of the gossip.
If people are spreading rumors about you, remember that. Gossip is primarily a reflection of the people spreading it. Keep your own conscience clear in that regard, and no matter what people say about you, you can always respond "I wonder why anyone would choose to talk like that about another person."