The Torah records that the Jewish people entered into a covenant (bris) with G-d regarding observance of the miztvos on two occasions. The first bris was at Har Sinai and the second was in the Plains of (Arvos) Moav, just before the passing of Moshe Rabbeinu. We still observe today the takanah (enactment) of Ezra to read the tochacha in Bechukosai soon before Shavuos and the tochacha in Ki Tavo soon before Rosh Hashanah. These two tochachos represent the text of the two covenants - the one at Har Sinai and the other of Arvos Moav.
Why was there a need for a second covenant? If the bris at Sinai was legally binding, what dimension was added with the bris of Ki Tavo?
The Torah gives us the answer in the beginning of parshas Nitzavim, where we are told that this second bris is not only binding on the individuals present today, but on all future generations as well. The bris at Sinai apparently was only binding on those individuals who were present. Although the Talmud records a tradition that the souls of all the future generations also participated in Maamad Har Sinai, this was only relevant with respect to impressing upon all of those souls the Jewish middah of baishanus, due to the gilui Shechican they encountered; but those souls were not legally bound to adhere to the contractual agreement of the bris.
The concept of a "Jewish people" only emerged in its fullest state once the Jewish people entered Eretz Yisroel and acquired their own national homeland. For a covenant to be binding on future generations, it must be entered into by a nation, which the future generations still belong to. The second bris - with the nation - was only begun by Moshe Rabbeinu, and was really completed by Yehoshua bin Nun at Har Grizim and Har Eival. The principle of arvus (that all Jews are held responsible for each other because they all constitute one entity) only started after the declaration of the berachos and kelalos at Har Grizim.
Rambam records several mitzvos which only apply in Eretz Yisroel because, as he explains, the main concept of "Klal Yisroel" applies only to those Jews actually living in Eretz Yisroel. After our entering Eretz Yisroel, the fact that Jews all over the world relate to Eretz Yisroel as their national homeland makes us all halachically considered "one nation" with respect to arvus, and more significantly with respect to the binding force of the second bris. Today we are still obligated in mitzvos, not because of the first bris (at Sinai), but rather because of the second bris.
It is interesting to note that all the pesukim in parshas Bechukosai appear in the plural, as opposed to the text of the bris in Ki Tavo, where all of the pesukim appear in the singular. The Gaon of Vilna points out (based on a passage in the Talmud) that when a parsha appears twice, once in the singular and once in the plural, the parsha in the singular is addressing all of Klal Yisroel as one entity, while the one in the plural is addressing each and every individual. In our case as well, the tochacha in Bechukosai is the text of the bris made with each individual Jew; the tochacha in Ki Tavo was the text of the bris made with Klal Yisroel as one entity - one nation.
According to the halacha, the one and only people who constitute "goy - nation" are the Jewish people. We are the only people who have a divinely recognized national homeland. The other nations of the world, strictly speaking, are only "mishpachos - families". The difference between a goy and a mishpacha is that a mishpacha consists of various individuals who relate to one another in a certain fashion. The term goy derives from the gaiv - body. In the Jewish nation (goy) all are considered as "one body".
The Talmud Yerushalmi comments on the prohibition against taking revenge, that just as if one accidentally cut his left hand with a knife held in his right hand, he would not react by slapping his right hand with his left to take revenge, since both hands are part of the same organism, so too it doesn't make sense for one Jew to take revenge against another Jew, for all Jews join together to constitute one goy - one body.[1]
This is the idea behind arvus, which is a principle formulated in Parshas Nitzavim in the last passuk dealing with the second bris, which was begun by Moshe Rabbeinu and completed by Yehosua at Har Grizim. As long as there is still one Jew somewhere in the world who hasn't yet heard the shofar, I haven't yet completely fulfilled my mitzvah of shofar, and therefore I'm considered as one who is (still) obligated in (mechuyav badavar) in the mitzvah of shofar, so I am still able to blow for another person who hasn't heard shofar.
This halachic distinction between the Jewish people and other nations also explains the phenomenon that we often witness: when one Jew acts in an inappropriate fashion, the non-Jewish world will often indict all the Jews, while if one Frenchman acts improperly, no one will think of condemning the entire French nation. The reason for this distinction is that the entire Jewish people are truly "one body" (goy), while the other nationalities are merely mishpachos.
Referring to the non-Jewish nations and to a single non-Jew as a goy is really an (halachically) imprecise colloquialism. Many gedolim felt that it is not correct to recite the text of the beracha every morning as "shelo asani goy", since berachos and tefillos ought not to be recited in a colloquial Hebrew. Many substituted instead "shelo asani nachri". The second bris at arvos Moav made the Jewish people unique - "Atta echad v'shimcha echad um'mi k'amcha Yisroel goy echad ba'aretz."