Individualism is a moral stance that emphasizes the moral worth of the individual. It involves the right of the individual to freedom and self-realization.
Individualism is different from the simple observable fact that human being are people. For example, it goes without saying that individual people make up social classes. However, in the marxist framework, there is no point in analysing the class struggle through the individuals that populate it: no matter who is in the bourgeoisie, what matters is that it exists as a class.
As such, individualism and by extension liberalism are diametrically opposed and in contradiction to marxism, which claims that motion (see dialectics) must be analysed through the class struggle.
History
In the western world, individualism was first put on the forefront of philosophy in the Age of Enlightenment. At the time, it presented a progressive force when compared to older moral concepts found in feudalism. It was also a required idea to establish capitalism, making it an example of the interaction between the base and superstructure.
Indeed, feudal lords received their right to rule from the monarch who received their right to rule from God. With the advent of capitalism and individualism, the only gate to someone's success (that is becoming part of the exploitative class) was a lack of capital, which technically everyone would be able to overcome. As such, it provided some justification for the rule of the bourgeoisie. It also kept workers fragmented and unable to organise as a class, as they would look to their individual interests before their class interests.
Contradictions
Individualism is one of the main principles of liberalism. It is an idealist principle in nature, because if every human being is an individual (a unique person, meaning there is nobody in the world exactly like them) then it follows to ask: why is every human being unique? The answer is that everyone is different, has different expectations, behaves differently, and thinks differently. When asking how everyone is able to have a different profile (essentially how come we are conscious, how come we are capable of thought?), individualists will eventually have to concede that there is no material basis for it and will either resort to God or the universe (a higher power) to explain it.
Individualism showed its limits and in turn became a reactionary force with the advent of neoliberalism. Margaret Thatcher famously said "There's no such thing as society. There are individual men and women and there are [nuclear] families". This is the essential nature of individualism, and shows its counter-revolutionary power. It became a very profitable vector for imperialism in the world.