A thousand of years back in Europe, carols were sung, but those were not actually Christmas carols. Those were the songs of the pagan sung during the celebration of Winter Solstice with the dancing tune of people. The actual meaning of carol is dancing to a tine of music. Winter Solstice which is celebrated in the time around 22nd December, is believed to be the shortest days of the year. The literal meaning of the word carol is a song sung in the praise of something or Dance. In reality, these carols were written and sung during all the seasons but the custom has actually survived in regards to Christmas
The Christians of the earlier time started the celebration of Christmas and started singing carols during Christmas instead of pagan solstice. During 129, the tradition of singing the song, known as "Angels Hymns" started in Rome sung during the Christmas service. After that, a famous Christmas hymn was written by the Comas who came from Jerusalem during 760. This was for the Orthodox church of the Greeks. And, a series of other Christmas carols came into existence that were all written in Europe. However, a lot of people did not like it as most of them were written in Latin language. And, it happened that, till the time we have reached the Middle Ages most people had lost their interest in the celebration of Christmas.
But, the idea got transformed when St. Francis of Assisi began to organize his nativity plays that were performed in Italy. All through the plays people sang songs or canticles, and the story was told in the same way with the help of songs. While, some of the parts of those songs were in Latin but most of them were in the language in which the audience can understand. And, thus the discovery of this new way of singing carols spread its wings to Germany, France, Spain and other parts of the Europe.
The earliest of the Christmas carols was written in the year 1410 but a few of them are in existence at this point in time. That earliest carol was about Jesus and Merry meeting at various locations in Bethlehem. But, most of these carols sung during the time of Elizabeth and the time and when the first carol was written were based on untrue stories that were more of entertaining genre rather than the religious piece of art. Most of them were sung usually by families and in households rather than in churches. The singers who used to travel began singing these songs and theses carols were changed to the local language. One of those carols that changed to other language became "I Saw their Ship.
And, it was when, in 1947 in England the Puritans and Oliver Cromwell came to power, the tradition of celebrating Christmas and singing happily the songs of carols got stopped. But, people have already fallen in love with carols, and they still sang them whenever possible (apparently in secret). These Carols remained unsung only till during the Victorian times!
There were a handful of official carols singers known as "Waits" before it actually singing carols in public became usual and popular. These were a handful of powerful people whose band was led by some popular leaders, who were only authorized to take money from the people of the villages. And, if other people dared to do that, they were known as beggars.
Those small group of people led by leaders who had the power to ask for money from the villagers, were called as "Waits" and that was because, they sand only during Christmas Eve. That night was called as Waitnight or Watchnight as the Shepherds were believed to have been watching their sheep when the angels from heaven appeared to tell them about Jesus.
Another reason for the popularity of carols is that, during that time many of the choirs and orchestra was being setup in England and people wanted to those songs during Christmas and that gave popularity to Carols. And, thus during the Victorian period, a number of other carols were written that include "Good King Wenceslas".
Eventually a great number of carol services came into existence and also the custom of singing carols on the streets flourished. From that very time till today, Carols have a great importance during Christmas and people sing them all around.
There are a great many carol services available these days, one of which is Carols by Candlelight services. In this service, whole of the church is illuminated with the help of candles and there is a great feeling of Christmas celebration. These services are undertaken all around the world.