I understand the referendum was held because Renzi was proposing a constitutional amendment to devolve power from the regions and give it to a more centralized government. While not a federation like Canada, Germany, Australia, or the USA, Italy is divided into political regions which do have some autonomy and certainly have influence on the national stage.
The reason a referendum was held in the first place was because Renzi failed to get the required two thirds support from the lower house for his proposal. By law that  meant  the question must be put to the people via referendum. 
Life in Europe will go on.