I joined the Democratic party in 1960, as a high school kid. Here's what I've learned.
From the very beginning, and throughout my active participation ever since, I've seen people come to party meetings of one sort or another and express their dissatisfaction with the status quo. Invariably, they wanted to change things in major ways. Problem was that they ignored the realities of politics in a nation that relies, more or less, on majority rule. Also invariably, they left, never to return to the discussion. They saw their goals as obviously correct, but couldn't get agreement on them.
Why do we have two major parties? Because we are based on majority rule, in general. What that means is that there are basically two choices for everything we vote on, either in the polling place or in our legislative bodies. That carries right down to precinct and district level political organizations. We vote on everything, and the majority rules in almost all cases. For major changes, a super-majority is often required, even.
I've attended a few dozen Democratic Party conventions, usually at the district level. One of the things that happens at those conventions is the introduction of resolutions that are basically designed to become part of a platform at that level or that will be voted on again at a higher level.
We vote at those conventions on those resolutions. No majority vote and the resolution goes no farther. Majority rules, because that's how our system is set up. The Democratic Party is a big tent. It's members include people that favor a wide range of views, starting with centrist views and moving toward the left. But, it's a majority thing. Stuff that's borderline centrist or borderline leftist rarely can get a majority of agreement. Big changes come slowly, and only after being proposed multiple times.
A lot of people show up every year, but then leave and don't return, because what will get majority support isn't what those people want. They opt themselves out of the party discussion with only a one-time try. This is what I've seen over and over again. Their big proposals don't have a chance, because they're introduced just once, and the frustrated person who introduced them left and never returned.
We have a two-party system because everything of any importance, from electing a President to passing laws in federal and state legislatures, requires a majority vote. We don't have thriving third parties, because they interfere with those majority decisions, and don't have enough participants to get a majority for their point of view.
That is the system that is in place. There's no real way to change it in a wholesale way, since a change also requires majority agreement. Is that a flaw in the system? That depends on your point of view. It is a flaw if the majority won't support things you believe are crucial. It is a flaw if you cannot get majority support for what you want. The system is designed to change only after convincing a majority that a change will be beneficial. That almost always takes time.
A lot of people won't participate in the political system that is in place. It's too lethargic and slow to change, in their opinion. So, they refuse to participate. The thing is that the system in place is the one that is in place. Lacking majority agreement that major change is needed, there's no way to get those changes.
Change in a two-party majority-based system cannot come quickly. That's both the beauty and the ugliness of two-party systems. Those who reject the party system don't participate in it. They lock themselves out of the way such systems change over time. They want a system that supports the minority views they hold, and refuse to participate in any system that doesn't support those minority views.
I don't see a solution. The Democratic Party is truly a big tent party. If you participate, your point of view will be heard, but may not be accepted by a majority. If you persist, you may be able to gain that majority support. If you leave, you will not gain any support at all and things will continue as they are, with only incremental changes. If your voice is not heard repeatedly, you will not prevail. It's pretty much that simple.
The tent flap is open, and every point of view is welcome. Every point of view will not immediately get the support of the majority, though. If you want your point of view to be accepted by the majority, you have to stay under the tent until that happens. If you leave, your point of view is off the table. You have to be in the tent to be heard. Your choice, really.
I know: tl;dr. But there it is.
= new reply since forum marked as read
for permission to support a candidate of my choice. 
Don't be so sure about that "solid blue state"...MVL works Both ways.
Sorry.....every single thing you wrote is true, and I don't mean to be glib.
I truly wish that we had a different political system. Having studied and taught comparative political systems, I personally believe that a multi-party parliamentary system would work much better than the blatantly dysfunctional two-party presidential system that we have.
But change to a parliamentary system - which could favor the development of several political parties - would require a Constitutional Amendment, so it likely will never happen - certainly not in my lifetime. Even if, parties would likely have to form coalitions to govern.
So I choose to be in the Democratic Party - have been Dem since even earlier than you, LOL - and will support whichever candidate that Party chooses to represent us for the Presidency in 2016.
I also choose to support the Democratic Party at state and local levels. Whether I personally agree or disagree with the policies of the majority of Dems, I believe that supporting Dem policies is the ONLY way that the United States of America will remain united. 
