A Short History
Musicians have been playing different instruments together for as long as instruments have been around, but it's only in the Baroque Period that they started to be called an Orchestra, have specific places to sit and have a leader.
In the Baroque Period, the composer would direct the orchestra from the harpsichord or while playing the violin. There were around 25 musicians in the orchestra. In operas there would be a larger number of musicians and a conductor but he would keep the beat with a large stick or pole, which he banged on the floor. In France in the 1600's the composer Jean-Baptiste Lully banged his foot with the pole and developed an infection and died!
In the Classical Period there were more instruments (around 45) and the harpsichord wasn't used any more. Music began to be more complex and the musicians had a hard time hearing each other. They also couldn't necessarily understand how their instrument related to the instruments. There needed to be a person who would direct the musicians and decide how the music would be played. That was the conductor. The conductor would face the audience and sometimes even leave the stage when he felt the musicians could manage on their own.
In the Romantic Period, orchestras became even larger (as many as 120 by the late Romantic Period!) and the music became even more complicated. The conductor was needed not only to keep everyone together but also decide how they were going to play. He began to face the musicians and interpret the music.