The scale was initially developed as the Sierra Club grading system in the 1930s to rate hikes and climbs in the Sierra Nevada range. Previously, hikes and climbs were described relative to others ("harder than X, but easier than Y"), but this made it difficult for those who hadn't done the other hikes or climbs to understand the comparison, so the numerical grading system was an attempt to codify this into a single scale.
Currently, according to the climbing textbook Mountaineering: The Freedom of the Hills, the system divides all hikes and climbs into five classes:
Note that the exact definition of the classes is somewhat controversial [1].
The increasing technical difficulty of Class 5 climbs led to the same "relative grading" problem that had caused the initial development of the system, so that class was subdivided in the 1950s. Initially it was based on ten climbs in Taquitz, California, and ran from "The Trough" at 5.0, a relatively modest technical climb, to "The Open Book" at 5.9, considered at the time the most difficult unaided climb humanly possible. However, advances in techniques and equipment have since led to harder climbs being completed. The first such climb was given the rating 5.10; the second the rating 5.11. It was later determined that the 5.11 climb was much harder than 5.10, leaving many climbs of varying difficulty bunched up at 5.10. To solve this, the scale has been further subdivided above the 5.9 mark with a-d suffixes. It is now an open-ended scale, with 5.15a the hardest climb having been completed (as of October 2003).