Yasushi Yamaguchi designed Tails for an internal competition for the sidekick. His entry won, but his character's name was changed from "Miles" to "Tails". Yasushi then sneaked the name "Miles" into the character's name as his legal name; "Tails" would be his nickname. Yasushi ended up with a compromise.
Miles was first seen on Sonic 2 for the Master System but made his first hit in Sonic 2 for the Megadrive where he played the part of Sonic's sidekick and also as a playable charecter. Unfortunately, he could not be made to fly at this point- but this changed first in Sonic and Tails, and then in Sonic 3 when he made his second major appearance. This was a big step forward for Miles and he got much more well known and respected at this point.
He also appears in Sonic the Comic and the Archie Sonic Comics.
In Sonic Adventure 2 Tails has prefered to use a mechanic device, known as the Tornado II, to attack rather then his own strength, an arguably much more effective method. The fact that he made these mecha's (and the way that he speaks) proves that he has dramatically improved in intelligence, surpassing all of his friends. Boy genious Tails can now been seen in action in Sonic X, a TV series in Japan- in all his brainy glory.
Recently (or not so recently, just more popular now) allegations of a Tails-Amy relationship have appeared. This may be touched upon by the TV series, or it may simply never be expanded upon.
The Tails character is perhaps based on the legendary kitsune.