The history of theatrical scenery is as old as the theatre itself, and just as obtuse and tradition-bound. What we tend to think of as 'traditional scenery', i.e. two-dimensional canvas-covered 'flats' painted to resemble a three-dimesional surface or vista, is in fact a relatively recent innovation and a signifigant departure from the more ancient forms of theatrical expression, which tended to rely less on the actual representation of space and more on the conveyance of action and mood. By the Shakespeareanan era, the occasional painted backdrop or theatrical prop was in evidence, but the show itself was written so as not to rely on such items to convey itself to the audience.
Our more modern notion of scenery, which dates back to the nineteenth century, finds it's origins in the dramatic spectacle of opera buffa, from which the modern opera is decended. Its elaborate settings were appropriated by the 'straight', or dramatic, theatre, through their use in comic operettas, burlesques, pantomimes, and the like. As time progressed, stge settings grew more and more realistic, reaching their peak in the Belasco realism of the 1910-20's, in which complete diners, with working soda-fountains and freshly-made food, were re-created onstage. Perhaps as a reaction to such excess, and in parallel with trends in the arts and architecture, scenery bagan a trend towards abstraction, although realistic settings reamained in evidence, and are still used today. At the same time, the musical theatre was evolving it's own set of scenic traditions, borrowing heavily from the burlesque and vaudeville style, with occasional nods to the trends of the 'straight' theatre. Everything came together in the 1980-90's, and continuing to today, until there is no established style of scenic production and pretty much anything goes. Modern stagecraft has grown so complex as to require the highly specialized skills of hundreds of artists and craftspeople to mount a single production, and it is impossible to tell at this time where things may lead.