More is using the ideal society described in Utopia to criticize the actual society in which he lived. The Utopians do not argue over religious matters, they do not have private property, they don't value the trappings of wealth (indeed, they use gold to make chamber pots) and they avoid engaging their population in unnecessary wars. They also value free expression and tolerate a range of beliefs, as long as a person believes in some sort of divine power. To his own society, More juxtaposes a society based on reason.
On the other hand, he clearly does not intend for the society he describes in Utopia to be accepted as ideal without question. The harmony of Utopia is achieved through an almost complete lack of individuality, and their wealth is based on slavery. People cannot move about as they please, and ultimately, they owe all allegiance to the state, though the family is also important. In the final analysis, More seems to have meant for his work to become a discussion starter, intended to spark debate among humanists and other educated men as to what would be the ideal state. It is noteworthy that he chooses a dialogue as the format for the book, and he decidedly does not think that the society he describes is a realistic possibility. "Utopia" basically means "no place" in Greek, as any good humanist would have instantly recognized, though it is also a pun on "Eutopia" or "good place".
More wrote Utopiato comment on the social and political problems of his own era (in England but all of Europe in general) by presenting the ideal conditions in Utopia. It is a supposition on how an ideal society might exist.
But the work is also satirical, so it's difficult to say when More was being playful and when he was being serious. Some scholars believe that he made it satirical in order to avoid backlash from social institutions.
Also strange is that some of the Utopian ways of life (i.e. euthanasia) go against Catholic teachings. More was a devout Catholic. Also, the pun on utopia meaning "no place" and "good place" is ambiguous. There is the interpretation that Utopia is not practical and therefore, cannot exist (no place).
So, this work is both a satire and criticism of European society. But it is also satirical about the idea of Utopia itself. Because of this and the inconsistencies between Utopian ideals and what we know of More's own beliefs, it would seem that he wrote Utopia to present and ideal but unlikely or even illogical society: perhaps indicating a realistic ideal in the middle ground between actual English society and the fictional world of Utopia.