Hamlet has often been called The Melancholy Dane. One of his chief character traits is melancholia. In this soliloquy he is thinking about commiting suicide. This is shown from the very beginning, when he says, "To be, or not to be: that is the question." Is it better to be alive or to be dead? This is acute melancholia or depression. Another character trait is his endless intellectualizing, cogitating, speculating, which seems to wear him out and lead him nowhere. After telling himself that there are multiple reasons why it would be much better to be dead than alive, he reverses himself and speculates that death might not really solve anything and might be worse than living. In either case, the Melancholy Dane tells himself, neither alternative is very pleasant.
Coleridge said that Hamlet thinks too much. This entire soliloquy is the best example in the play of the truth of Coleridge's diagnosis. Hamlet is like two other famous characters in literature who seem lost in a labyrinth of their own thoughts--perhaps because all three have exceptionally high intelligence: The others are Quentin Compson in William Faulkner's The Sound and the Fury and Stephen Dedalus in James Joyce's Ulysses.