1. What is it?

A dystopia is a nightmare society.

In literature, dystopias tend to be societies that have followed a path towards self-oppression, censorship, authoritarianism, and restrictive social expectations.

2. How is it made?

3. Examples in literature

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by Yevgeny Zamyatin

Excerpt from ‘Third Entry’ (translated from Russian):

As schoolchildren we all read (perhaps you have, too) that greatest literary monument to have come down to us from ancient days — “The Railway Guide.” But set it side by side with our Table, and it will be as graphite next to a diamond: both consist of the same element — carbon — yet how eternal, how transparent is the diamond, how it gleams! Whose breath will fail to quicken as he rushes clattering along the pages of “The Railway Guide”? But our Table of Hours! Why, it transforms each one of us into a figure of steel, a six-wheeled hero of a mighty epic poem. Every morning, with six-wheeled precision, at the same hour and the same moment, we — millions of us — get up as one. At the same hour, in million-headed unison, we start work; and in million-headed unison we end it. And, fused into a single million-handed body, at the same second, designated by the Table, we lift our spoons to our mouths. At the same second, we come out for our walk, go to the auditorium, go to the hall for Taylor exercises, fall asleep….
I shall be entirely frank: even we have not yet found an absolute, precise solution to the problem of happiness. Twice a day, from sixteen to seventeen, and from twenty-one to twenty-two, the single mighty organism breaks up into separate cells; these are the Personal Hours designated by the Table. In these hours you will see modestly lowered shades in the rooms of some; others will walk with measured tread along the avenue, as though climbing the brass stairs of the March; still others, like myself now, are at their desks. But I am confident — and you may call me an idealist and dreamer — I am confident that sooner or later we shall fit these Personal Hours as well into the general formula. Some day these 86,400 seconds will also be entered in the Table of Hours. I have read and heard many incredible things about those times when people still lived in a free, i.e., unorganized, savage condition. But most incredible of all, it seems to me, is that the state authority of that time — no matter how rudimentary — could allow men to live without anything like our Table, without obligatory walks,  without exact regulation of mealtimes, getting up and going to bed whenever they felt like it. Some historians even say that in those times the street lights burned all night, and people walked and drove around in the streets at all hours of the night.
Try as I may, I cannot understand it. After all, no matter how limited their intelligence, they should have understood that such a way of life was truly mass murder — even if slow murder. The state (humaneness) forbade the killing of a single individual, but not the partial killing of millions day by day. To kill one individual, that is, to diminish the total sum of human lives by fifty years, was criminal. But to diminish the sum of human lives by fifty million years was not considered criminal. Isn’t that absurd? Today, any ten-year-old will solve this mathematical-moral problem in half a minute. They, with all their Kants taken together, could not solve it (because it never occurred to any of the Kants to build a system of scientific ethics, i.e., ethics based on subtraction, addition, division, and multiplication).
And wasn’t it absurd that the state (it dared to call itself a state!) could leave sexual life without any semblance of control? As often and as much as anyone might wish. . . . Totally unscientific, like animals. And blindly, like animals, they bore their young. Isn’t it ridiculous: to know agriculture, poultry-breeding, fish-breeding (we have exact information that they knew all this), yet fail to go on to the ultimate step of this logical ladder – child-breeding; fail to establish such a thing as our Maternal and Paternal Norms.

Nineteen Eighty-Four 
by George Orwell

Excerpt from Chapter 17:

A Party member lives from birth to death under the eye of the Thought Police. Even when he is alone he can never be sure that he is alone. Wherever he may be, asleep or awake, working or resting, in his bath or in bed, he can be inspected without warning and without knowing that he is being inspected. Nothing that he does is indifferent. His friendships, his relaxations, his behaviour towards his wife and children, the expression of his face when he is alone, the words he mutters in sleep, even the characteristic movements of his body, are all jealously scrutinized. Not only any actual misdemeanour, but any eccentricity, however small, any change of habits, any nervous mannerism that could possibly be the symptom of an inner struggle, is certain to be detected. He has no freedom of choice in any direction whatever. On the other hand his actions are not regulated by law or by any clearly formulated code of behaviour. In Oceania there is no law. Thoughts and actions which, when detected, mean certain death are not formally forbidden, and the endless purges, arrests, tortures, imprisonments, and vaporizations are not inflicted as punishment for crimes which have actually been committed, but are merely the wiping-out of persons who might perhaps commit a crime at some time in the future. A Party member is required to have not only the right opinions, but the right instincts. Many of the beliefs and attitudes demanded of him are never plainly stated, and could not be stated without laying bare the contradictions inherent in Ingsoc. If he is a person naturally orthodox (in Newspeak a good-thinker), he will in all circumstances know, without taking thought, what is the true belief or the desirable emotion. But in any case an elaborate mental training, undergone in childhood and grouping itself round the Newspeak words crimestop, blackwhite, and doublethink, makes him unwilling and unable to think too deeply on any subject whatever.
A Party member is expected to have no private emotions and no respites from enthusiasm. He is supposed to live in a continuous frenzy of hatred of foreign enemies and internal traitors, triumph over victories, and self-abasement before the power and wisdom of the Party. The discontents produced by his bare, unsatisfying life are deliberately turned outwards and dissipated by such devices as the Two Minutes Hate, and the speculations which might possibly induce a sceptical or rebellious attitude are killed in advance by his early acquired inner discipline. The first and simplest stage in the discipline, which can be taught even to young children, is called, in Newspeak, crimestop. Crimestop means the faculty of stopping short, as though by instinct, at the threshold of any dangerous thought. It includes the power of not grasping analogies, of failing to perceive logical errors, of misunderstanding the simplest arguments if they are inimical to Ingsoc, and of being bored or repelled by any train of thought which is capable of leading in a heretical direction. Crimestop, in short, means protective stupidity. But stupidity is not enough. On the contrary, orthodoxy in the full sense demands a control over one’s own mental processes as complete as that of a contortionist over his body. Oceanic society rests ultimately on the belief that Big Brother is omnipotent and that the Party is infallible. But since in reality Big Brother is not omnipotent and the party is not infallible, there is need for an unwearying, moment-to-moment flexibility in the treatment of facts. The keyword here is blackwhite. Like so many Newspeak words, this word has two mutually contradictory meanings. Applied to an opponent, it means the habit of impudently claiming that black is white, in contradiction of the plain facts. Applied to a Party member, it means a loyal willingness to say that black is white when Party discipline demands this. But it means also the ability to believe that black is white, and more, to know that black is white, and to forget that one has ever believed the contrary. This demands a continuous alteration of the past, made possible by the system of thought which really embraces all the rest, and which is known in Newspeak as doublethink.