Basically, the phrase describes the generation that came to maturity during World War I and describes the cumulative effect of the new kind of warfare on that generation. Not only were people shocked that one war could involve most of the ‘first world’ nations, but also the technology involved in modern warfare created carnage on a scale that had never been seen before. The sheer amount of death and destruction from WWI led people to question the meaning of life, similar to the sort of zeitgeist of panic that was felt during the Victorian “crisis of faith.”
The phrase “the Lost Generation” was popularized by Ernest Hemingway in his novel The Sun Also Rises, as an epigraph attributed to Gertrude Stein. The protagonist in the novel, Jake Barnes, has fought in WWI and carries a particularly disabling and symbolic wound: he has been castrated by shrapnel. Understanding the male member as a well-established symbol for manhood and virility, Jake has been ‘unmanned’ by the war, and now he feels ‘lost,’ unable to live life fully after the damage he has sustained. His situation has been read as symbolic of the ennui of the entire generation traumatized by the first world war.