Don't watch the movie "Hostel" and expect any of that to be realistic. Never mind the gory parts -- even the most mundane scenes of that movie were imagined by someone who has never stayed in a hostel -- or maybe even seen one.
That said, hostels are the classic backpacker's accommodation. They vary widely in Europe, from Hostel International-branded to independently-owned. General observations:
When choosing your hostel, read fellow travelers' recommendations. In addition to the hostel booking website, try Trip Advisor and BUG Europe.