Quick summary:
Alienation is one of the ways that capitalism sucks. It's a symptom that something's not right, not the underlying cause. Alienation is something that happens because of the way that capitalism is built.
In short, alienation is a separation between things that should be together. This separation causes tension.
Four ways that capitalism is alienating:
In a hunter-gatherer style society, you would make stuff (Marx says 'produce commodities') for yourself, and your immediate needs. Therefore, you're highly motivated to do it, because you need it.
Under capitalism, you don't produce for yourself, you produce for others. Yeah, sometimes you might use a similar class of things, like, a person who works for a car factory drives a car, but they don't drive every car they make. This is why 'dogfooding' is a special concept: it's not the norm.
Consider a cobbler. They don't just do one single task, they produce a whole item: a shoe. They do a number of different tasks, to produce a whole good.
Under capitalism, you have assembly lines. Everyone does one single task, over and over and over. You're deprived of the enjoyment of making a whole, useful object, and instead are basically reduced to a machine.
Consider how someone working retail is like working in a factory: the cashier and the shelf stocker do two discrete tasks in a series.
Saying 'species-being' is synonymous with 'human nature' is a bit suspect, but I love this one quote from Capital, especially when you consider the software implications:
A spider conducts operations that resemble those of a weaver, and a bee puts to shame many an architect in the construction of her cells. But what distinguishes the worst architect from the best of bees is this, that the architect raises his structure in imagination before he erects it in reality.
Humans are different from animals in that we have higher-level thinking. "Gattungswesen" is more like that than our modern definition of 'human nature.' One of the ways that humans are different is that we can imagine what we want. We have drive and determination. We construct and end in our minds, and then take action to pursue that end. We're not just purely driven by instinct: we have higher-level goals.
Capitalism alienates us from ourselves, because workers lose the ability to have control and direction under their own life. Your boss tells you what to do. You don't get to choose. One of the reasons we love nights and weekends is that we are back under control of the direction of our own lives, and are free to pursue our own dreams and goals.
In order to keep wages low and maximize profits, capitalists have lots of incentive to pitch workers against each other, and so we are alienated from each other. We're on the same team, but we're pitched against each other, to keep us weak as a class, so the capitalist class can retain control.
I felt this very acutely when I became an assistant general manager of a pizza shop. I got a small bonus if I kept our labor cost under a certain percentage. Now, it was my job to tell my co-workers to take breaks and go home early, robbing them of wages so that I could get a tiny, tiny fraction of that money.
Also, meritocracy. Enough said.