OK so about the origins of Grunge and how it came into the fashion forefront... In the late 80s, a bunch of musicians started to form bands in the Washington state, escaping the gloomy weather in their garages.
The music tended to be influenced from punk and the hard rock of the 70s.
It wasn't until Nirvana's second album "Nevermind" and in particular the first single from the album "Smells Like Teen Spirit", that the scene was catapulted into the mainstream.
Of course grunge was extremely anti-fashion. The music reflected the unhappy mood of America and Europe's children ("Generation X") and the clothes were further validation of the "we don't care" youth attitude. The messy hair and clothes were intended to counteract the image of plasticity that MTV sold.
When Marc Jacobs designed a SS '93 collection for Perry Ellis, stylizing grunge, consumers were shocked and rejected it stating "you cannot charge $1200 for a dress that looks like it was bought in a second hand store". Subsequently, Jacobs was fired by the Perry Ellis Company despite tremendous editorial support from fashion critics who felt that the look was significant - it showed women they didn't have to dress in a certain style. They had choices.
Perry Ellis SS '93, Marc Jacobs AW '06
Unfortunately, by embracing the look, the fashion critics killed the anti-fashion trend and with Jacobs' firing, grunge suffered a backlash. On the musical front, the bands that had started the movement rejected it's new associations with the fashion world and with the untimely death of Kurt Cobain in '94, grunge too was pronounced dead.
I feel their has been a slight resurrection of late.