This is Benedict Anderson's critical contribution on nationalism. He analyzes the problem from the philosophical lens first, then exploring the sociological changes that have led to the present conception of nationalism in the west. On the philosophical front, Anderson says that a nation is not a real thing; it is a perception that is shared among many people who (because of their shared citizenship) are able to construe meaning from their citizenship in a popular way, leading to a social construct and a movement.
Anderson says that in the past, these issues of identity and belonging were settled in more concrete ways. He talks about the past and the European attachment to monarchs, contrasting that to the present day where the leadership of a nation is not automatically part of one's identity (leading the identification one level more abstract: identifying not with the king, but the nation). The changes in religion are similar. Instead of finding communal identity in religion the way communities tended to in the past, people tend not to share that identity at the social level.
So, because people belong in communities that lack open, shared identifiers, the nation-state becomes the object of that desire for shared identity. Anderson explores this thesis with examples that tie the history of America to personal, private emotions, like the tomb for the Unknown Soldier. He says that by sharing an emotional attachment to US history (for example), Americans are able to fabricate a pseudo-religious attachment to being American that is easily shared among friends and neighbors, leading to the nationalism Anderson observes.
