The word “catholic” in a Christian context is a bit confusing. The word means “universal” or “inclusive”.
The Roman Catholic (capital letter) church is the group who purports that since they can trace an unbroken historic chain as one organization then they are the true church. Protestants though say that the only chain that counts is the passing on of truth; and since the Roman (western) church added so much false belief and practice to Jesus’ teaching that they do not represent the true church. The real chain is truth. Thus the “catholic” church is all those people who hold faithfully to following Jesus.
Brian McLaren in his book Generous Orthodoxy wants the word catholic to refer to a desire to be inclusive, loving everyone, and inviting everyone into the Christian faith. That’s good, and certainly, as he points out, better than an elitist claim that the Catholic (Roman Catholic) organization is the one (and only one) true Church; and that only its members are in the one true faith.
However, in early church history the word catholic meant something different than just welcoming everyone. Starting in the second century many people (including some Christians) began to teach that people really didn’t understand what Jesus was showing us. These teachers (eventually called Gnostics) taught that what Jesus really was showing us was a mysterious God that was in another realm and could only be known by radical seeking of Truth; and imparted cosmic wisdom, received internally, is given to the spirit of seekers of Truth. This knowledge is received inwardly as “enlightenment” and is a secret wisdom known only to the enlightened.
So, the Gnostics taught that the idea that Jesus came to die for sin, that Jesus was a sacrifice to appease God, that only the blood of Jesus could justify, that Jesus would give the Holy Spirit to those believed, and that God would judge those who did not walk in the Spirit, was not what Jesus actually meant. These Gnostics wrote their own version of what Jesus really meant and claimed that the so called “gospels” and “apostles tradition” (which the Christians were reading and which later they collected into what we now call the New Testament) was not the truth. The new versions of history that they wrote (the “Gnostic Gospels”), offered as an alternative to the New Testament writings and tell a very different story from the Christian’s scripture.
Here is a brief description (from Wikipedia) of the teaching of an early Gnostic named Marcion:
Study of the Jewish Scriptures, along with received writings circulating in the nascent Church, led Marcion to conclude that many of the teachings of Jesus were incompatible with the actions of the God of the Old Testament, Yahweh. Marcion responded by developing a dualist system of belief around the year 144. This dual-god notion allowed Marcion to reconcile contradictions between Old Covenant theology and the Gospel message proclaimed by Jesus.
Marcion affirmed Jesus to be the saviour sent by the Heavenly Father, and Paul as his chief apostle. In contrast to the nascent Christian church, Marcion declared that Christianity was in complete discontinuity with Judaism and entirely opposed to the Old Testament message. Marcion did not claim that the Jewish Scriptures were false. Instead, Marcion asserted that they were to be read in an absolutely literal manner, thereby developing an understanding that YHWH was not the same god spoken of by Jesus. For example, Marcion argued that the Genesis account of YHWH walking through the Garden of Eden asking where Adam was proved YHWH inhabited a physical body and was without universal knowledge (omniscience), attributes wholly incompatible with the Heavenly Father professed by Jesus.
According to Marcion, the god of the Old Testament, whom he called the Demiurge, the creator of the material universe, is a jealous tribal deity of the Jews, whose law represents legalisticreciprocal justice and who punishes mankind for its sins through suffering and death. Contrastingly, the god that Jesus professed is an altogether different being, a universal god of compassion and love who looks upon humanity with benevolence and mercy. Marcion also produced his Antitheses contrasting the Demiurge of the Old Testament with the Heavenly Father of the New Testament.
Marcion held Jesus to be the son of the Heavenly Father but understood the incarnation in a docetic manner, i.e. that Jesus’ body was only an imitation of a material body, and consequently denied Jesus’ physical and bodily birth, death, and resurrection (e.g., he accepted Luke’s Gospel yet eliminated portions such as the birth narrative) and thereby denied the historic Christian Gospel (1 Cor 15:3-4).
Now, when the Gnostic teachers in the second century started challenging the Christian teachers the Christians replied that they were passing on what the Apostles themselves taught. They pointed out that the gospels and apostolic letters were written by eye witnesses to Jesus and that they were passed on to disciples from generation to generation. For example, Clement and Polycarp (early Christian teachers) can be tied directly to John the apostle, and thus the apostolic teaching was passed on person to person. The Gnostics could make no such connection. This “apostolic succession” and the fact that the Christian gospels and letters were written just after Jesus lived (whereas Gnostic gospels were written much later by people who did not have any connection to Jesus or the apostles) shows that the Christians were representing the teachings of Jesus accurately.
So, since all the Christians (at that time) were in one group, and in agreement on the essential message of Jesus and the apostles, then these Christians were the representatives of Jesus. Since they all were of the same mind (and united in opposition to the Gnostics) then these Christians were united into one (catholic) church.
So, “catholic” at that time meant “One Church” (united) in belief and practice as the authentic representatives of Jesus. Anyone who was not in this catholic group was not really teaching the authentic truth and was, in fact, teaching an alternative (new) truth. Thus, if you were not “in the church” then you were not really a Christian.
Thus, “catholic” was at that time a good thing. It protected the message and it was a safe haven for those wanting to understand the teachings of Jesus.