There seems to be two views of the church, one ancient and one modern. The modern came into the forefront at Vatican II, but it was being taught before then by theologians.
The ancient view is this: the Catholic Church is the visible sign of salvation, the visible sign which tells us who is in the way of salvation and who isn’t. Only those within the Church can truly know, love, serve, and live in a manner pleasing to God. Belonging to the faith and unity of the Church is absolutely necessary for salvation. Separation from the visible Church is separation from Christ.
The modern view is this: the Catholic Church is the most perfect guide to eternal life, one must belong to the Church to have the best chances of being saved, and of living in a manner most pleasing to God. However, it is possible to know, love, serve, and please God outside of the Catholic Church, though it is much more difficult do so without the teaching, the liturgy, and the sacraments of the Church. One can be visibly separated from the Church yet united to Christ invisibly through an implicit or explicit desire.
On the side of the ancient view you have all the ancient fathers, popes, doctors, magisterial statements, which clearly express that one must be Catholic to be saved. Some theologians teach that one can belong to the Church by desire, but that desire must be explicit and one must at least believe in Incarnation and the Trinity.
On the side of the modern view is the modern theologians, beginning a few centuries ago and particularly with Jesuit theologians, the most recent Council, recent catechism, recent magisterium.
One way to solve this problem is to say that the modern Church is heretical and anathema, and to avoid it, to separate from the visible Roman hierarchy which is said to have lost the faith by allowing this modern view to be taught.
Another is to say that the modern view has not been proclaimed with any (infallible) authority by the magisterium, and that one must resist this modern opinion that has spread among the members of the Church while remaining loyal to the Church’s hierarchical authority.
Another is to say that the modern view is actually the same as the ancient view, only updated and more refined by the progress made by theologians, and that one must in any case be obedient to the living authority of the magisterium, which has now taught the modern view.
I think that the distinction between the two views is best made as follows: the ancient view states that membership in the Church is a necessity of means, the modern view states that membership in the Church is a necessity of precept. A necessity of means is one where you absolutely have to belong to the Church in order to be saved, because the Church is the means of salvation; a necessity of precept is one where membership in the Church is practically necessary for salvation, because it is hard to be saved without the Church, but not absolutely so.
Note that the proponents of the modern view are forced to say that membership in the Church is a necessity of means, because this is a thrice-defined dogma (Extra Ecclesiam Nulla Salus, Outside the Church there is No Salvation). However, they equivocate on this expression and twist it so that it practically means that membership in the Church is only a necessity of precept, because one can be a member of the Church by an explicit, or even an implicit, desire, i.e. if you are truly contrite for your sins, but have never heard of the Catholic Church, then you belong to the Catholic Church implicitly by your being perfectly contrite for your sins. This practically means that one does not have to be a Catholic to be saved, and that being a Catholic is only a precept, it is “advice” and not a commandment. The notion of “membership” in the Church has gone from meaning those who profess the same faith, participate in the same sacraments, and are subject to the same pontifical head, to those who have good-will in their souls and are therefore implicitly or explicitly are members of the same Church. It is not necessary to belong to the “body” of the Church in order to belong to the “soul” of the Church, in the modern view; whereas in the ancient view, the soul is the form of the body and does not wander about outside it as an invisible ghost.
Note also that it’s not the case that all “traditionalists” hold to the ancient view and reject the modern view. Archbishop Lefebvre was a "modernist" in this sense:
Does that mean that no Protestant, no Muslim, no Buddhist or animist will be saved? No, it would be a second error to think that. Those who cry for intolerance in interpreting St. Cyprian’s formula, “Outside the Church there is no salvation,” also reject the Creed, “I confess one baptism for the remission of sins,” and are insufficiently instructed as to what baptism is. There are three ways of receiving it: the baptism of water; the baptism of blood (that of the martyrs who confessed the faith while still catechumens) and baptism of desire.
Baptism of desire can be explicit. Many times in Africa I heard one of our catechumens say to me, “Father, baptize me straightaway because if I die before you come again, I shall go to hell.” I told him, “No, if you have no mortal sin on your conscience and if you desire baptism, then you already have the grace in you.”
The doctrine of the Church also recognizes implicit-baptism of desire. This consists in doing the will of God. God knows all men and He knows that amongst Protestants, Muslims, Buddhists and in the whole of humanity there are men of good will. They receive the grace of baptism without knowing it, but in an effective way. In this way they become part of the Church.
The error consists in thinking that they are saved by their religion. They are saved in their religion but not by it. There is no Buddhist church in heaven, no Protestant church. This is perhaps hard to accept, but it is the truth. I did not found the Church, but rather Our Lord the Son of God. As priests we must state the truth.
The ancient view appeals to those who believe in the mysterious nature of predestination as taught by St. Augustine; to those who want to preserve doctrinal clarity; to those who greatly revere the authority of the fathers, the doctors, the popes; to those who see a continuity in tradition and immutability of dogma as essential to the faith; to those who see the Church in an Incarnational manner, as the Body of Christ, as the visible means of salvation.
The modern view appeals to those who think the idea that only Catholics are saved is proud or bigoted; to those who cannot stomach the notion that so many are lost; to those who wish to be on friendly, easy-going terms with people from other religions; to those who see dogma as something that needs to be clarified by expert theologians through time; to those who think God’s power or God’s love is somehow limited if God grants salvation only to Catholics; to those who see the Church in a “spiritual” or “mystical” manner, operating invisibly all over the world.
The ancient view is called by its opponents Jansenist or sometimes Feeneyite. The modern view is called Pelagian or Modernist.
One objection to the ancient view is that is the cause of despair because it means so many are lost.
One objection to the modern view is that it leads to religious indifferentism, because if it is possible to be saved in a non-Catholic religion then the call to convert to the Catholic religion is not as pressing of a necessity.
It seems that this ecclesiological matter is the most important debate in the Church today. We are desperately in need of doctrinal statements to clarify this ambiguity in the Church's ecclesiology, and a
Summa of Catholic ecclesiology which will once and for all sum up what is the Holy Catholic Church.