Note: this post is huge. There is no natural break point. Sorry.
At the risk of over-simplifying world history and religion, 500 years ago, everyone in Western Europe was either a Catholic, a Jew, or a pagan. There weren't too many pagans, the Jews were not always (unfortunately most always) treated well and so kept to themselves, and many of the Catholics weren't all that clear about what they believed nor were they in line with what the official doctrines of the day were. Partially because survival comes before Sunday School and there's no real distinct Catholic way of growing wheat or minding the herds, and those were the main concerns of life. Well, that and keeping the warring king next door from overrunning your warring king and killing you.
Anyway, this led to a great deal of corruption within the religious beliefs and structures of the day. There's probably a dissertation that needs to undergird this, but I think that corruption grows best in prosperous times and second-best in desperate times. In prosperous times, people often overlook anything that doesn't hurt their prosperity: who cares if nepotism is the rule and not the exception? In desperate times, people are willing to overlook many things in hopes that times will improve. Well-fed people are too often willing to ignore things while well-fed, and starving people will do whatever it takes to get to eat---even at great cost to ideals or abstract values.
So, since there were some extremely wealthy folks dwelling in nice homes living off the fat of the land, and meanwhile a great many poor folks wishing for some fat, the behavior of the clergy was often overlooked. Because of a stability of descending lines and no division tolerated, the church of the time acquired a great deal of material wealth and political influence. (Side note: those who fuss that Christians have too much say in American politics need to read some history: Popes of the Middle Ages picked kings, removed kings, and such---no group has that power in America.)
Since the church structures were not completely locked into a small group of families like the nobility was, the church became the place to go for those who wanted wealth and power. While a good many basic priests, monks, nuns, and ordinary Christians worked to get through the days and tried to teach the basic faith to the generations to come, there were a few that learned to work the system and rise the ranks. These aimed for the positions that lived in opulence that excelled kings.
Except that this opulence required funding. Lots of funding. Keep in mind that the economy of those days was "mixed:" there was some monetary, but a lot of folks lived, raised food, ate most of it and paid the rest as their taxes, tithes, tributes, and so forth. There wasn't much "money" in the hands of ordinary folks. The wealthy had it: the corrupt power-brokers in the church system wanted it. The wealthy, though, weren't parting with the wealth for no reason.
Enter guilt. Guilt is an astounding motivator. Most people know that they've done wrong things and feel guilt for it. Guilt causes people to pay an extra fee when they buy a computer for the computer company to plant a tree---even though the fee far exceeds what the person could pay to plant their own tree. Guilt causes you to buy half of your Christmas gifts. Getting guilt to go away is a big part of life. So, what can make it go away?
Well, this guilt is a psychological feeling. We're not talking forensic guilt: nothing takes away that you are guilty of stealing if you intentionally walked out of Wal-Mart without paying for those 4 flat-screen TVs. We're talking about the "I feel guilty because I haven't done x enough" guilt. And there's always something to feel that guilt about. Yet the emotions can be relieved if we're convinced that we've done something right to balance out the guilt. So, for the meanness to a cat, we adopt a stray cat. For missing an event, we buy a fancy gift.
The religious establishment of the Middle Ages found a way to capitalize on this. The church was in a position to express to people both their guilt and the release of that guilt. Moreover, the church could tell people what caused their guilt. So, the list of guilt-causing behaviors could grow. The guilt-releasing actions could be directed. This became big business---the church's power over guilt extended beyond the grave in people's mind. Guilt meant heaven, hell, or a tormented wait for heaven. You didn't want guilt and you didn't want a loved one to have it.
Enter the indulgence. An indulgence could be earned, but most were purchased and it was a release from guilt. It could even be pre-purchased: got plans for mischief? Stock up. The theology was questionable and the practice grew to abominable proportions. The wealthy would pay for the guilt they felt (probably could have alleviated it by feeding the hungry instead), the poor would pay for their guilt, and powers that held power would keep it.
That is, until the biggest salesman of indulgences hit the town of Wittenberg, Germany. The local pastor-priest was a man fed up with guilt. He had bought indulgences, gone on pilgrimages, and was now trying to teach both young priests and a congregation to alleviate his guilt. When Johann Tetzel, the indulgence salesman hit town, the pastor-priest had enough. He went to the church door, posted a list of things he wanted to have a civil, religious discussion about, and then went home. The list was long, but the statements built on each other to make a clear point.
Yet the civil discussion of theology never happened. The list was put onto a recent invention, the printing press, and spread. As did the pastor's other writings and ideas. These ideas connected with other like-minded men who came to realize that they were neither alone nor wrong. They realized something was wrong with the way things were and times had to change.
The end result was a split unlike the church had seen in about 500 years, but not one that resulted in "you stay on your side of the line, we'll stay on ours" like the Great Schism of 1054. Instead, it was one that affected the political power of the church as "the church" became "the churches" and they had to live side-by-side. No longer could one religious leader elevate or devastate the world. It was not pretty and some of the cure was as bad as the disease, but the end was born a renewed effort to base Christianity at its source: The Bible. The rallying cries of sola Scriptura & sola fide, Scripture alone and faith alone, resound through to today: pure Christianity teaches, based in the Bible, that God paid for sin through Christ and our faith cleanses us from guilt. That our obedience and loyalty are owed to the Only One, the One who died for us, who rose on the third day, and who ascended on high to reign at the right hand of God.
Would we have gotten there without Martin Luther and his 95 Theses on the door at Wittenberg, posted October 31, 1517? Possibly, and possibly not. But we owe a huge debt to the idea that the human conscience is bound captive only to God. That no authority, be it church or state, has the right to monopolize life. This is a good thing.