Well, to understand this, we have to understand feudalism first.

Under feudalism, there are families (landlords) who own land, and peasants who don't. The peasants would individually come to the landlords, ask for a title on the land, be granted that title and work on the land, giving some of their products in the form of land rent or tribute or tax back to the landlords. This individualistic relation was the main driving force in feudalism, however other forms of ownership also existed. Families sometimes owned small businesses which didn't require much planning, guilds were formed as a precursor to industry, as well as small production shops. Under feudalism, ownership is pretty individualistic and petty.

But under capitalism, industry changes it all. Instead of one or a few peasants working on a plot of land, you have a team of workers, fifty, a hundred, a thousand, even more, working in factories. Agriculture was not left alone either, as large corporations took over land, hiring farmers instead of giving land titles to them. With this, you see a myriad of workers cooperating together under, more or less, a "production plan" that varied from different enterprises. That is socialization of labor. The change from small scale, individualistic production to large scale, social production.