Moral relativism is really very simple. Basing morality on “values” is another way of saying moral claims are justified according to their context. In the context of American society, what the terrorists did on 9’11 was evil and wrong. But in the context of the fundamentalist Islam of the terrorists, the terrorist attack on the twin towers was moral and holy. It’s not that one point of view is “correct” and the other is “incorrect,” they are just conflicting worldviews. Recall these images as part of the response to 9’11: http://www.youtube.com/watch?v=3vOJCQr1Now . The truth of a moral claim is derived from its context. The context is not absolute, and if you take away the context the “truth” of the moral claim is gone. The “whole” (context) gives meaning to the part (makes the moral claim “true). Nietzsche pointed this out with his argument about “slave morality” (eg., a slave has to be meek and has no money, so being meek is interpreted as being morally good - “the meek shall inherit the earth, Matthew 5:5” - and the quest for money and its accumulation is morally bad - “It’s easier for a camel to go through the eye of a needle than it is for a rich man to get into heaven, Mark 10:25”) Nietzsche’s point wasn’t that you had to accept his interpretation of history on this point, but rather that people determine what is moral and immoral relative to their point of view, which means their understanding of right and wrong depends on the context (i.e., depends on a person’s biases, prejudices, culture, evolutionary history, etc.). In Philosophy this is known as “Relativism: morality and the hermeneutic circle.” It is like interpreting a text. In order to understand what a part of a story means, you have to consider it in relation to the entire story. You can’t explain the “part” without the “whole.” But this is what moral realism tries to do. Moral realism doesn’t make sense because you can have two equally valid contradictory moral interpretations of the same event. Take the example of rape. We consider rape to be wrong under any circumstance. But the ancient Greeks considered war rape of women “socially acceptable behaviour well within the rules of warfare”, and warriors considered the conquered women “legitimate booty, useful as wives, concubines, slave labour or battle-camp trophy”.
Morality always comes down to what you like, and what you don’t like, if enough powereful people feel the same about a particular value, then it becomes morality. That’s all there is to it.