With Nevermind, Nirvana hit sort of a nexus in the annals of Rock n' Roll history. What I know is all based on rumor, speculation and conjecture, but I will tell you.

The story really begins with Motley Crue wasting a million dollars of their record label's money and not really having a viable product to show for it. Major labels were fed up with rock star behavior, and things were about to change.

SubPop was really central to the Seattle grunge scene. I don't honestly know for certain, but I suspect SubPop was a small operation that helped their members promote their own recordings. It is absolutely normal today and how most labels operate, but back in the 1980's, only the major record labels released national records, and unless a band was signed to a major label, they probably could not afford to record in a professional studio, have their tracks professionally mixed and mastered, and certainly not afford to market the product nationally or get shelf space in record stores. So SubPop would (my conjecture btw) take the recordings made by the bands, which traditionally were only considered demos, and just release them as is as the national product. It saved bundles of money, and SubPop, being small, didn't have the resources to front their members studio time anyway. I am nearly certain Mudhoney's first record was probably self-made, and SubPop helped them market their amateur recording --they were already professional musicians by 1985, i.e. they got paid to perform, but IMO none of the early Grunge records, such as Nirvana's Bleach, sound professionally engineered... they're amateur only in the sense that a national quality producer and engineer and studio probably wasn't involved, but probably recorded in the proverbial garage, except actually at a "pro" studio, in the sense that was a studio, and it cost them something, maybe $15-$30/hour, as opposed to $800/hour, or whatever places like Abbey Road Studios charge.

Motley Crue's infamous failure and this idea that SubPop came up with of releasing demo quality records as national product, changed everything. Bands signed to major label no longer were given any money for signing. A lucky artist that made it to the majors would be loaned enough money by the label to record a professional demo (kind of a oxymoron). It was pro quality, but only a few tracks. If the label thought it was any good, they might release it as an EP, or loan the band money to go on tour and promote themselves. But the bands now had to pay the labels back.

SubPop also cleverly shopped their members' product to the big labels. They sold Mudhunny to Reprise, and they sold Nirvana to Geffen. But I believe Nirvana was the first to seriously rain mountains of money, so to speak, and I think it was incidental that it was Nirvana.

What is important about Nevermind is the production. It is not amateur, like all the other Grunge records of the era, and it was like nothing ever heard before at the national level, either. Butch Vig, who had already produced a few successful Sonic Youth records, and later of Garbage, had pioneered a novel production style that I have never heard duplicated by anyone but Butch Vig, specifically, Smashing Pumpkin's Siamese Dream. If you compare the production of these two records, they are identical in class. That's what Butch Vig and what was once Smart Studios (closed) sounds like, that slick, liquidy sort of sound. Nirvana doesn't sound like that, and Nevermind stands out as an atypical record among their discography, and Cobain was very critical of it because it was too polished and too Popy. It is also the only record of Nirvana's that Vig produced. And I believe it was a certified "gold record" within two months of its release, which is, of course, very very good and not at all easy to do.

All anyone thinks about is the artist, but national releases have little to do with the artist. It's about money, it's about having product that can be widely sold, and that depends a lot on marketing, but it especially depends on having a national quality product.

Case in point is Weezer's Blue Album, which has similarly fast gold and platinum status (which is based on sales btw, 500K for gold, 1M for platinum in the US). Their second record, Pinkerton, after a decade still had only sold like 200K copies. Why the poor performance? It is theorized that it is because Pinkerton was produced by an amateur, namely, Rivers Cuomo, who is a professional musician. If he ever did, by the time he personally mixed Pinkerton, he didn't have national quality engineering skills, and the record was of poor production quality. The tracked sounds are still of sufficiently high enough fidelity, it just wasn't produced and mixed by a professional, national quality engineer.
Why would it matter? Mudhunny's amateur demos were sold and distributed nationally. Maybe it's because Weezer isn't grunge, or from Seattle? Who knows.
Thankfully, Weezer's subsequent records were professionally produced and financially performed very well compared to Pinkerton.

And Nirvana did the same thing with Nevermind and subsequent records. Bleach wasn't as popular. Similarly, if you look at any early 90's lofi act, such as Flaming Lips or Superchunk, you'll notice that as they became more successful, and had the money to afford to properly record their records, each subsequent record became higher and higher fidelity until it doesn't really make sense to refer to them as lofi acts anymore. Though the music didn't really change, the genre changed from "LoFi" to "Indy." And Grunge is not really Punk, but it depends how you define Punk. If punk is a fashion statement and political, then maybe. But Punk has a musical form, and it is really the same as that of Polka. If you can't square dance to it, if the signature is not 4/4, then it probably isn't legitimately Punk. Grunge didn't necessarily have that form, and what Nirvana released was a reaction to and departure from Punk with unique chord structures never heard in Punk, and not always 4/4 signature (such as "If You Must," and "Beeswax").

Anyway, SubPop (not Apple with iTunes Store and iPod, which fed off the trend to great success) is the reason every new artist for the last 30 years tries to self-release or own their own label. Last band I am aware of that went from unsigned straight to major label record deal was Dave Matthews Band, but only because they had their own distribution list of something like 100K names and addresses and were already touring nationally on their own independent label. They already had a proven national product with their self-funded tours, so RCA was probably throwing money at them to get them to sign, almost like the old days of big acts in the 1950s through the 1980s.