You could quite easily fill a small library with the books that have been written arguing this question. Add in the articles and graduate seminar papers and that library swells to medium-sized. Toss in the ink spilled WRT whether or not separating the Gilded Age and Progressive Era makes any sense, and it gets even more complicated.

The most profanely simple answer I can offer is that it was the time when the American economy moved from mostly agricultural to mostly industrial. When manufacturing became factory-based. When immigration increased many-fold. When popular politics got really complicated. When the US economic system became more-or-less fixed into what we know today. When social order became upset in some places, reinforced in others, and unintelligible in still others.

What does all of that mean? Hoo-boy, there's a question. While most historiography argues about stuff, that of the GAPE (Gilded Age and Progressive Era) is so divergent, it's nearly impossible to form an answer. Some historians have seen the GAPE as the start of a bureaucratized America. (See Weibe, Hays, Hofstadter (sort of,) etc.) Some historians see it as a time when capitalism became entrenched in America (see -- among many others -- Kolko, Weinstein, and Sklar.) Some see it as a time of rapid democratic expansion (Johnston and Stromquist come to mind, tho they differ greatly on many things.) Still others see it as a time of political apathy, a missed opportunity to do something politically great (McGerr, Lasch (sort of,) and to some degree, Gutman.)

I hope you see the point here -- there is absolutely no one correct answer to your questions. Those answers, like most interesting things about history, depend on the historian and the times in which that historian wrote.

If you'd like a really good summation of the various historical interpretations of the GAPE, pick up Robert Johnston's The Radical Middle Class. Setting aside his argument (which is good,) the essays that introduce each chapter are perhaps the richest analysis of the historiography of the GAPE that you'll ever find.