Written by IridescentStardust and ducky-overlord
The original idea behind dolls (and why they're called dolls in the first place) comes from the cut-out paper dolls - a paper cut-out of a figure (typically in underwear) with separate clothes that hold onto the figure with folding tabs.
The first popular version of virtual 'paper dolls' was through a Japanese program called KiSS (Kisekae Set System), dating back to 1991. Originally they were the same as paper dolls - only on the computer. A base figure, or template, had different sets of clothes to drag and drop onto the template. Using layers, they were able to create an illusion of depth not possible with paper dolls (for example - a figure with their hands in front of them would have different layers, making it easy to have a sleeve in front of the chest, a bag, arm-warmers, or other accessories).
These virtual paper dolls became very popular throughout the 1990's. They spread from just being dress-up dolls, having 'KiSS sets' that were a 'create-your-own' faces, wedding cakes, full doll-houses, as well as simple games (such as puzzles). However, the most popular kind of 'KiSS set' was still the dress-up dolls.
In 1995, The Palace Chat Program used dolls as avatars - small, full body pixel people (due to the avatar size restrictions, they were no more than 132px tall). People quickly caught on, making their own modifications of the avatars, and sharing them for others to use. These first 'dollz' were inspired by Barbie and quickly evolved into something called "sk8ter dollz," moving on to the dolls we know now. Other styles quickly emerged, such as Preps, Wonderkinz, Silents, Uniques, Ravers, and more.
Soon after these sites emerged, dollers started creating different base bodies. Not necessarily creating them for The Palace Chat anymore, they weren't restricted to dolls smaller than 132 pixels. They became more detailed, larger, and the different styles of dolls exploded. In the early 2000's, dollers began to organize pageants - contests with multiple rounds, similar to beauty pageants. Dollers began to think of their works more seriously. The term 'dollz' began phasing out to differentiate the original dolls from The Palace Chat dollz.
On August 3 of 2007, Deviantart created a category for digital dolls! Now, there are many different kinds of dolls, ranging from baseless (created without a base body, from scratch), tooled dolls (dolls created with the tools basic pixel art programs don't have), collaborated dolls, and much more.
Let's take a trip down memory lane and check out a few old dolling sites that are still up!
Secret Dollz has a lot of dollmakers of the different original types of dollz (preps, silents, etc). A very good example of what dolling used to be.
Angychan's site was really popular in the early 2000's. She was one of the first people to start doing tooled dolls. Check out her deviantArt!
The Doll Palace is pretty much where everything started.
Xandorra's has been around since 2001, used to be one of the most popular websites. She even has a timeline for the site to show her progression and accomplishments.
Josie's Dolls was a really popular site as well, she held most of the pageants in the late 90's early 2000's. Unfortunately, she is no longer around.
Veriria's Doll Haven has been around since 1997. Probably one of the oldest doll sites still around!
An article on The Palace with the history of the original "dollz".