At the time of the Revolution, French society was rigidly hierarchical. Social classes were grouped into three estates of the realm: the First Estate (which consisted of the clergy); the Second Estate (nobility); and the Third Estate (commoners). The Estates General of 1789 was, as the name suggests, a general assembly of all three estates of the realm. It hadn't met since 1614, but such was the gravity of the economic crisis gripping France at that time that it was thought necessary by the King and the nobility to reconvene an institution many thought had become totally obsolete.

As expected, the Estates General soon ran into trouble. No agreement on any issues of substance could be reached. Part of the problem was that the clergy and nobility were unprepared to consider any proposals that could in any way diminish their privileges, particularly those relating to tax.

The response of the Third Estate was to break off from the First and Second Estates to form what they called a National Assembly. Although this unilateral act was a direct reply to the actions of the clergy and nobility, the theoretical groundwork had already been laid prior to the Estates' convocation.

On the eve of the Estates General, a clergyman by the name of the Abbe Sieyes had written a famous political pamphlet called What Is The Third Estate? in which he set out to establish that the Third Estate was in itself synonymous with the nation. For Sieyes, the answer to the question "What is the Third Estate?" was "everything." The Third Estate was the nation. It represented the vast majority of Frenchmen and, unlike the other two Estates, paid taxes. The French revolutionaries were clearly influenced by the American colonists' demand of "No taxation without representation."

So the concept of nationalism that came out of the French Revolution was, on the one hand, liberating, but at the same time it was exclusionary. Only certain groups of people were seen as being genuinely part of the nation, really and authentically French. This attitude created serious problems as the newly liberated French sought to expand their revolution beyond their borders. The desire to liberate quickly degenerated into repression as the national rights of other countries and territories were overridden by those of the French.

Nationalism as it emerged from the French Revolution also stored up numerous problems at home. As the concept of the nation was inherently exclusionary, various groups became marginalized, such as women, people of color, and the working classes. At various times in French history, they were never fully seen as being part of the nation. Arguably, the underlying tensions unleashed by the national idea have never truly been resolved to this day in France, as the often fractious and heated debate concerning immigration illustrates.

The French Revolution helped to create the idea of nationalism because it promoted the idea that the people owned the state and that the people had an important stake in the state.  The French did not have a monopoly on this idea, but it was manifested more strongly in the French Revolution than it had been in any European country up to that time.

Before the French Revolution, people tended to identify themselves more as subjects of a certain ruler.  King Louis XIV (who of course ruled long before the French Revolution) could say that he and the state were the same thing and the idea was accepted by many.  People did not generally believe that the state was answerable to them.  Therefore, they did not feel a strong loyalty to the state.

With the French Revolution, this changed.  The revolution stressed the idea that the people were all citizens of the state.  This meant that the state belonged to them and should answer to them.  In addition, the French Revolution eventually asked all of its members to fight for it in a mass national army unlike anything seen before.  Because of these factors, French people came to identify very strongly with the French state.  This idea spread to other countries where people came more and more to identify with their governments.

In this way, the French Revolution helped nationalism become more prevalent by promoting the idea that the people should feel an affinity with the state and a sense that they were part-owners of that state.