Ulysses was released in the same year as T.S. Eliot's The Wasteland (1922). In the way that Eliot's poem is treated as the modernist poem, Ulysses is generally regarded as the modernist novel.
So what is modernism? Well, historically, modernism is usually linked with the First World War and the rise of industrialization. The basic contention was that modern life was fundamentally different than the life of the past. People's lives had become increasingly complex, and they were forced to play a number of different societal roles on a daily basis. The result was that life came to seem fragmented and disjointed. In the wake of the most destructive war the world had ever seen, it also seemed as if there was somehow a basic failure of communication between people. In the modern world, language was being strained as people tried to empathize and understand one another.
Aesthetically (fancy word for an artistic style), the dictum of modernism comes from Ezra Pound's imperative: "Make it New." Modernist writers tended to realize their place in a long literary tradition. Eliot and Joyce felt the need to master this tradition, to achieve a level of scholarship that began with the Greeks and moved all the way up to modern day novels. It was as if the present moment was something to be achieved, as if one had to understand everything that came before in order to understand what was happening now. The flipside, however, was that modernist artists tended to feel that art had become stale and clichéd, and they sought different styles and artistic modes to express their ideas. A big tenet of modernism is difficulty, forcing the reader to work hard to realize what you are saying, the idea being that the harder they have to work, the more fully the idea will be communicated once they realize it.
A lot of writers get lumped in as modernists – Virginia Woolf, Henry James, William Faulkner, Ford Madox Ford, Gertrude Stein, Ernest Hemingway, Henry Miller, D.H. Lawrence, Thomas Mann, Robert Musil, Samuel Beckett, T.S. Eliot, Ezra Pound, Wallace Stevens, etc. Our disclaimer is that you have to realize that modernism is a vast category that all of these artists have been lumped into by critics, and that different critics have different reasons for calling people modernists. You might read about modernism as if it were one coherent theory and once someone says the word "modernism" everyone knows what they're talking about. That's simply not the case. There is a lot of contention about what exactly modernism is, but at least in contrast to "postmodernism," many of these artists did view themselves as part of a broader literary movement. And, inarguably, James Joyce was the center of this literary movement.
Ulysses is a modernist novel in that it focuses on something seemingly ordinary – a day in the life of Leopold Bloom – and then portrays it as if it were unfamiliar, extremely strange and special and bizarre. Joyce summons his immense erudition on subjects literary, philosophical, historical, linguistic, religious, scientific, etc., and he brings it all to bear on the day of June 16th, 1904. The past is alive in the novel, and you realize that for Joyce, the present is not like a bead being pushed along a string; the present is simply the cusp of a great wave that is the past.
And aside from the allusions themselves, Joyce's stylistic play in the novel was revolutionary. He had an incredible gift for mimicking other styles, and an episode like "Oxen of the Sun," you see that he has – on a stylistic level – digested pretty much the whole of Western literature. Joyce's style has been imitated by a number of artists after him, but it's never been matched. In our opinion, whenever you realize that Joyce is an influence on someone, it's hard not to read their writing as watered-down Joyce.
Ulysses is one of those rare books that you can make grand claims about without sounding ridiculous, but the book really did create a genre. It changed the way that people think about what genre is and what it means to classify a book in one way versus another.