It’s any given night in 2002. We’re at the Free Butt in Brighton, a small pub with a stage and an anything-goes spirit that serves as an extended living room and rite-of-passage workplace for aspiring musicians. Natasha Khan – not yet Bat for Lashes, still a Brighton University art student – is dancing on top of the bar while Yeah Yeah Yeahs are tearing through their first UK tour. Guy McKnight, the lead singer of the brutally underrated Eighties Matchbox B-Line Disaster, has just finished pulling pints, his day job when he’s not the city’s greatest frontman. Steve Ansell of Cat on Form, soon to form Blood Red Shoes, is the in-house sound engineer. Joe Mount from Metronomy is watching this week’s buzziest local support band. The atmosphere is charged with the feeling that anyone in the room might be about to become someone known beyond our city’s limits. Often, they did.

In the early 2000s, music scenes tended to have stories that bands and media could rally around: a shared silhouette, a signature sound, a shaped mythology. New York City gave us the Strokes and Interpol with their tight black denim and wiry riffs; Libertines-era London had its own sticky churn of style, press and parties. Yet Brighton was rarely described as a scene, despite being home to Nick Cave and Paul McCartney and hothousing a surge of remarkable young talent that’s still thriving more than 20 years later. In this seaside enclave, rock bands sounded and looked so unlike each other, they never needed to jostle for a single narrow lane.

I was the guitarist in one of these bands, Electrelane. Although we went on to record in the US, the city left a deep imprint on our earlier work. We made our first album, 2001’s Rock It to the Moon, in a studio owned by the Levellers and featured the seafront’s historic Golden Gallopers carousel on its front cover. We wrote our second in a former public toilet in the city centre; a cramped, light-starved space that turned out to be oddly generative.

Through the 1990s, Brighton had been defined, and to some extent dominated, by the big beat explosion centred on Fatboy Slim and the Skint Records roster. It was a genuine moment, but had run its course by the early 2000s. Something new was assembling: a grassroots rock and indie energy that had little to do with the previous era’s DJ culture. The bands emerging from rehearsal rooms and cramped venues had no obvious precedent in the city. The feeling was that anything was possible. “Culturally, Brighton had this massive injection of talent, which was really alchemising during the early 2000s,” says Khan over tea in her newly adopted home town of Lewes, where she’s working on a memoir. “You could feel it bubbling away.”

These were also the early days of Sea Power, who moved from Reading to Brighton, drawn by “the dilapidated charm and fresh sea air”, says singer Jan Scott Wilkinson. In its infancy, the band set up Club Sea Power, a ramshackle monthly night promising “memory, myth and malfeasant behaviour” held at another flagship independent venue, the Lift. It also enabled the band to test new tracks and led to them getting signed to Rough Trade after Geoff Travis caught a show. “Our flyers told people to ‘leave etiquette at the door and let loose with grace and abandon,’” recalls Wilkinson. “Those nights were chaotic, teetering on disaster. At the same time it was a good feeling knowing we were one of a number of great bands in town who had aspirations to put a mark on the world.”

The British music industry in the early 2000s was still largely a boys’ club. But Brighton felt different. Two of the city’s most influential independent promoters – still going strong – were women: Lisa Lout, who has also managed the Great Escape festival for the past two decades, and Anna Moulson of Melting Vinyl, who was responsible for putting on the Strokes’ legendary first UK gig – 150 capacity – at the Lift in 2001. My old schoolmate Bobby Barry introduced the three female singers of the Pipettes to each other in the Basketmakers Arms in 2003: a band that clicked into place alongside Electrelane and Bat for Lashes. We were all being featured in NME and supporting big-name bands, but we weren’t cut from the same cloth: Electrelane became known for moody, motorik rock; Bat for Lashes created a world around her specific style of spellbound pop; the Pipettes unleashed a fun, polka-dotted girl-group revival. There was a sense of a rising tide lifting all boats.

“You didn’t have to look hard to find alternative culture in Brighton,” says Rose Dougall, founding singer of the Pipettes and now half of the Waeve with Blur’s Graham Coxon. “It was on every street, from the vintage shops and pubs to how people dressed. Even the colours of the houses were vibrant and different. I was going out to clubs three times a week and there was a strong sense of something to belong to. There were so many small venues for bands to play when we were all starting out, it didn’t feel unattainable to get projects off the ground.”

Brighton is about 50 miles from London, but the atmosphere couldn’t have been more different. “London was really exciting at the time, but it had a darker energy,” says Eamon Hamilton, the lead singer of Brakes (he formerly played keys in Sea Power), who will reform later this year on the heels of Rough Trade’s planned rerelease of their 2005 debut album, Give Blood. “The Libertines were electric and so much fun to watch. But other bands started copying their sound and didn’t have the same chemistry.” Brighton, however, “is small enough to walk everywhere, so you’d bump into other musicians in the street constantly. Everyone seemed excited about what everyone else was doing. I think the Brighton bands just wanted to impress themselves and each other.”

The energy in the city was also mirrored in its music journalism. Careless Talk Costs Lives magazine was co-founded in 2002 by Brighton journalist Everett True and rock photographer Steve Gullick. The publication was deliberately short-lived, planned at 12 issues, and released numbered backwards. True went on to launch the wider-known Plan B, which ran for five years, but there was something special about the fierce flash of Careless Talk Costs Lives and its focus on elevating female writers and bands at a time when that was still unusual. “Everyone was in the same clubs and rehearsal spaces, breathing that fresh sea air and experiencing that incredible light,” says Gullick, who set out to create a “vital and uncompromised” magazine. “Brighton is naturally an inspiring environment and I think that massively affected the creative output.”

“I knew I was in the right place,” says Khan, who lived on the seafront while she was writing her debut album, Fur and Gold, which was rereleased in February for its 20th anniversary. “I’d go down to the sea all the time when I was writing, just to hear the seagulls and look at that big blue expanse. In the three years I was a student there, I grew 20 times bigger in terms of my capacity for understanding composition and performance.”

The Brighton captured here is now gone. As rents rose through the 2010s, the cheap flats, loss-absorbing venues and affordable rehearsal rooms that had made it possible for artists, students and misfits to be broke and brilliant in the same city steadily disappeared. The Free Butt closed, as did many of the independent record stores that were a lifeblood of inspiration (Khan remembers the owner of the now shuttered Edgeworld Records putting aside artists he thought she’d love, like the Langley School Music Project and Godspeed You! Black Emperor). Once those conditions eroded, the energy moved on, as it often does, along the south coast: Margate and Ramsgate had their moment but that, too, has largely crested. Now the same restless migration is tracking toward Folkestone and Shoreham.

But Brighton’s network of venues, clubs and record stores – a few still hanging on – continued to create the conditions for the next wave of artists like the Kooks, Dream Wife, Gazelle Twin, Rizzle Kicks and Memorials. If scenes are built on sameness, Brighton draws its strength from difference. It has never bottled a defining sound; instead, it fosters something more unwieldy – a place where daring venues, salty sea air and a constant collision of wildly dissimilar bands make it possible for artists to become fully, fearlessly themselves.

• Brakes’ UK tour begins at Krankenhaus festival, Cumbria, 28-30 August