The album was written and recorded by frontman Jason Lytle alone in a remote farmhouse. He has been quoted as saying: "I just remember everything out there was dusty. Humidity and dust", and described having made the recordings "in my boxer shorts, bent over keyboards with sweat dripping off my forehead, frustrated, hungover".

The album's title The Sophtware Slump is a reference to a sophomore slump, a term given to an artist's second album which is seen to fail to live up to the first.

"Jed the Humanoid" concerns an android named Jed, and is a eulogy for the robot, who drinks himself to death. Regarding Jed, who also appears in "Jed's Other Poem (Beautiful Ground)" and had appeared earlier in the song "Jeddy 3's Poem" from the 1999 EP Signal to Snow Ratio, Lytle noted: "I used Jed as my therapy vehicle, I guess... I was attempting to approach the subject of drinking, and possibly the fact that you may perhaps drink a little bit too much. [...] Humour has always been way up there at the top of my list of dealing with anything that could be considered serious. Sometimes you don't wanna be smacked in the face with certain bits of reality like that." A music reviewer for The Guardian, Dorian Lynskey, called it "the saddest robot song ever written."

The album's penultimate song, "Miner at the Dial-a-View", originates from a 1989 home demo, with Lytle noting: "After a certain point, when the Earth has been tapped of all its resources, they start mining other planets. And there's these machines – they're a lot like, y'know, the tabletop poker games that you find in bars now – and the idea is to add coins to it, and you can punch in the latitude and longitude of places on earth, and revisit wherever you want. And [the narrator]'s actually revisiting his house, and he's seeing the girl that he's got back home is hanging out with some other guy, and he misses home."

The CMJ New Music Monthly noted Jason Lytle's "new infatuation with technology, expertly juxtaposed with his almost spiritual connection to the West's wide-open spaces and bird-filled skies", and stated that "Lytle expresses sympathy for the lost souls and machines of the high-tech dot-com landscape throughout the album".  The New York Times called the album "a heart-achingly beautiful requiem for a culture in which progress and technology have led to alienation and disposability".  Allmusic called it "Grandaddy's most impressive work yet". The Daily Telegraph said the album was one of the highlights of 2000, describing it as "a work of rare and precious qualities. A collection of emotional, richly melodic songs that deal with modern man's uneasy relationship with technology". Steve Taylor, in his book The A to X of Alternative Music, viewed The Sophtware Slump as "clean, lush and less understated" than the band's previous work, describing "The Crystal Lake" as "a perfectly executed pop song".

The indie music magazine Under the Radar ranked The Sophtware Slump fifteenth in its list of the best albums of the 2000s.

Regarding the album's acclaim and legacy, Jason Lytle noted: "I would record The Sophtware Slump over again. The fact that this album has gotten this sort of acclaim only reconfirms to me what a load of shit this business is. An album about trees and computers that came out right after OK Computer? I don't get it... but I do." In a 2011 review of the album, Mike Powell of Pitchfork wrote: "If Radiohead captured a feeling of pre-millenial tension, The Sophtware Slump captured the feeling of disappointment that came afterward — the feeling that life was going to be more or less the same as it had been, only now we'd have to live with the fact that we once thought it'd be so different: the feeling of January 2, 2000."