The era of the Judges was defined by a severe leadership vacuum that plunged the nation into spiritual and social chaos. Without a strong central government, individuals could openly engage in private idolatry without facing any public resistance.
It is against this backdrop of lawlessness that Micah's actions unfold. Because there was no authoritative prince, judge, or leader in power, no one stepped forward to protest or prevent him from building his own private temple and idol [רד״ק, מצודת דוד, מלבי״ם]. Everyone simply did whatever they pleased [ביאור שטיינזלץ]. Rather than rising up against this behavior, the Israelites remained entirely silent [מלבי״ם]. In later, more established times, a situation where a person could freely construct a private shrine exactly as they wished would have been impossible [ביאור שטיינזלץ].
There are different perspectives on exactly when this breakdown of order took place. Some view it as a broad description of the entire era of the Judges [ביאור שטיינזלץ]. Others pinpoint the events to a specific window at the very beginning of this period. According to this approach, the incident occurred shortly after the death of Joshua—who certainly would have wiped out such idolatry had he been alive—but before the first judge, Othniel son of Kenaz, took power during the oppression of Cushan-Rishathaim [רלב״ג, מצודת דוד].
This early timeline is supported by later events in the story, where the tribe of Dan is described as still searching for land to settle. This struggle for borders was characteristic of the years immediately following Joshua's death [רלב״ג]. Because this absence of firm leadership against idolatry persisted for many years, Micah's idol ultimately survived until the very end of the era of the Judges [רלב״ג].