The Elizabethan age is seen as a golden age because it was a long period of peace and prosperity in England in which the economy grew and the arts flourished.
After a period of civil war, called the War of the Roses, dragged the country down in the late fifteenth century, the Tudor family won and established a dynasty that united the two warring families that war. Henry VII set up the groundwork for the modern bureaucratic state, and his son, Henry VIII, continued that policy of much needed centralization, but also caused a great deal of turmoil by pulling the country out of Roman Catholicism and into Protestantism so that he could divorce his wife. After his death, there was more turmoil, especially during the reign of his daughter Mary, known as Bloody Mary for her severe persecution of Protestants.
After all this polarization and upheaval, the country was more than ready for peace and stability by the time Elizabeth came to the throne. Elizabeth was a wise ruler who combined the best traits of her parents. She knew her grasp on the throne was tenuous—she was a woman, which many people felt disqualified her, and she was the daughter of a woman whom many people did not believe was legitimately married to Henry VIII. Therefore, Elizabeth had to tread very carefully, doing her best to pull her country together and not alienate anybody unnecessarily. She insisted on Protestantism as the state religion, as she had to, as that was the only faith that legitimized her as monarch, but she persecuted Catholics as little as possible. She kept her country out of war, meaning many resources could be used to grow domestic prosperity.
Under Elizabeth's reign of peace and general benevolence, the arts flourished. This an age particularly associated with great literature, such as the plays of Shakespeare and Marlowe, Spenser's Faerie Queen, and the rise of the sonnet, all important parts of why Elizabeth's reign is seen as a golden age.