The idea is that many times in history, you have a problem where a belief system becomes the established tradition but proves untenable given social changes. Then you have a generation which only conceives of things in certain ways, while realizing that the foundations of their thought lack solid roots.
Pankaj Mishra offers a good overview of how this works in the context of Buddhism. The Buddha was historically contingent, in that he needed to arise in some sort of rapidly changing cultural world. The actual environment in India was one in which urban republics rose in power and the Brahminical elite was rapidly dispossessed in favor of roving bands of ascetic and a new merchant elite. Lack of faith in the old morality, rising individualism and wealth, and social disconnect led to a growing intellectual dissatisfaction. Buddhism's adoption of "dukkha" or the unsatisfactoriness of life as a key part of the doctrine was a natural choice given the social reality.
Nietzche gets at a very similar phenomenon with the whole "God is dead" line. The point being that the Christian myth--that life ought to be lived in accordance with an a system of absolute morals, while passions are denigrated and reason elevated--was increasingly at odds with the rise of science and secular culture. I guess you could call this 'nihlism' broadly but it seems to me a more specific historical trend.
There are various possible responses. Nietzche called attention to new "secular gods" and these really did become very popular. Or you could just do drugs. Being some sort of superman was Nietzche's suggested response, but it doesn't seem particularly feasible. Generally, people seek validation in some larger system, and destroying one usually leads to a quick search for another. The common response seems to be a version of utopianism. On the left, there is this sense that if previous human arrangements universally result in human suffering, then somehow we can build a better society through the explicit rejection of all received wisdom and the adoption of a permanent revolution. So you get this studious, affected distaste of just about everything, anger and grievance for the sake of it, combined with a hope in "change;" damn the actual need or path the change will take.
You see a response on the right too, especially among neoconservatives. This ideology really came from a plea for a more humble and gradual approach for foreign and domestic policy, and was primarily motivated through a disappointment in liberal institutions, but somehow morphed into a paranoid style of politics. From Cheney to Iraq, you have a well-chronicled story of disgust at liberals combined with relative ignorance and a limitless belief in the transformability of society (Iraqi or American) through partisan means. Much as it pains me to say, something similar seems to happen with the free-market fundamentalists, especially once they get a bit of power in other countries. This is not to say I'm a fan of Naomi Klein--you may know what I think of her--and many of the people involved are not conservatives.