Secularism is used in a restricted sense today, but it retains a philosophical aspect in political and social situations. Secularism has always carried a strong connotation of the desire to establish an autonomous political and social sphere which is naturalistic and materialistic, as opposed to a religious realm where the supernatural and faith take precedence.
Under Christianity the state was treated as a necessary evil — something required to uphold public order, but ultimately an institution that served to corrupt people and distract them from their more important duties to the Church. In contrast, the Church itself was seen as the primary institution to which the state must remain subordinate. Although the state might be responsible for public order, the Church carried the more important responsibility of people's souls and eternal fates.
This began to change during the Middle Ages as philosophers and theologians broke away from this Augustinian view of politics and government. Thomas Aquinas argued that the state is entrusted by God with the necessary and positive functions of creating the social conditions in this world that allow for salvation in the next. The state is still treated as subordinate to the Church, but it is no longer so negative.
Change moved faster with the Italian Renaissance: even early Renaissance figures like Dante believed that temporal leaders had a right and duty to exercise authority independent of any needs or desires of the Church. Over time, the basic principles of political philosophers like Machiavelli would dominate Europe. A final break with the past occurred not in the writings of political philosophers but in the actions of intolerant Christians. Traditionally it was believed that Christian doctrines needed to be at the heart of civil society, but that fell apart during the religious wars which occurred after the Protestant Reformation.
As Christian slaughtered Christian and Christian state warred against Christian state because of differences in Christian doctrine, people realized the need to create some separation between Christianity on the one hand and the state and culture on the other. In this way society might develop basic institutions and principles of social organization on which all could agree, regardless of ecclesiastical affiliation. Some relied upon the doctrine of Natural Law as derived from ancient Stoic philosophers; others developed rationalized forms of Christianity, for example Deism. Renaissance Humanism also played an important role by providing access to documents and ideas from ancient Greece and Rome.
This is not to say that philosophers and politicians sought to create a separation of church and state as people understand it today. Such a system would have been foreign to the people of the 16th century; they continued to believe in the need for Christianity for people to be moral and to obey their political leaders so wouldn't have likely approved. The idea of a secular sphere which gives rights and liberties to atheists would have been seen as abhorrent.
They were not trying to break away from Christianity, but they did realize that Christianity would not be an adequate basis for settling the religious and political disputes which plagued Europe. They sought to develop an independent realm of thought and action where political and social issues could be settled without recourse to religious principles or even religious authorities.
The development of the philosophy of natural law by scholars like Hobbes and Grotius played an important role. Hugo de Groot, Grotius' Dutch name, stuck his neck out by challenging the religious culture of the Netherlands and arguing that people were free to change their political and social circumstances to suit their needs. People had a right to form their own laws, create their own political institutions, and make decisions about how to conduct political and social affairs. This meant that they could affect the course of their own salvation — and that posed a serious challenge to religious orthodoxy.
This legal philosophy relied upon principles of human freedom and employed universal concepts to propose particular ideas about the nature of both humanity and government. Instead of a universal Church based upon transcendental values and supervising a universal political empire, they conceived of independent, nations that were sovereign in their own right and subordinate to no religious authority.
Each state was free to make its own laws and achieve the goals it decided were important. Each state was free of ecclesiastical control or interference and not expected to agree on everything, even though they might share Christianity. Instead, they were expected to pursue their own national objectives as their leaders saw fit. Over time this led to political relativism: political decisions were evaluated according to local context and cultural variations instead of universal principles.
Such relativism did not come to dominate, though, because secular forms of universal political and social doctrines also developed. These doctrines treated humanity as more unified than cultural variations imply. Despite local variations, all people have the same basic needs and desires and thus there are a set of universal principles of economic, political, and/or social justice according to which economic, political, and social systems should be judged.
Christian universalism, which had been dealt a sore blow in the religious sphere by the Protestant Reformation, was sidelined in the political and social spheres by the challenges of relativism and universalism, both secular in nature. Neither subordinated the state to religious or supernatural interests and values. Both agitated for the acknowledgment of an autonomous sphere of knowledge, values, and action where human needs could be addressed by human institutions, free of the burdens of ecclesiastical authorities or interference.