Awesome little gif from here
And then it was all over really, bar the evolution.
What kind of world did these first little blobs of life appear in? The surrounding temperature is pretty much unknown, hypothesises for both warm and cold have been put forward and all that can really be agreed on is somewhere between 4-100 degrees. It was most definitely wet; water was in liquid form when life first started, a fact that was probably vitally important for the formation of life as we know it.
The atmosphere would have been very different, little oxygen and an abundance of carbon dioxide with plenty of methane being released into the atmosphere once the first life forms (appropriately called methanogens) started eking out an entropy-defying existence. In order to get energy to power cellular processes you need to set up redox pathways, which involve cycles of electron donors and acceptors. The main electron donors around at the time were H2, H2S and CH4 and the main acceptor probably nitrogenous. Water, the electron donor used for photosynthesis, was around in abundance, but none of the little proto-life-blobs quite had the energy required to split it (or the physical proteins required back then either) so it mostly stayed unused.
Carbon dioxide levels went down, methane levels went up, the planet warmed up a little due to global warming. Things stayed like that for a billion years or so (1 Ga) and then something quite special happened, something that would have mindblowingly devastating affects on the life surrounding it.
Photosynthesis. The uptake of carbon dioxide into the cell, and the reactions that stick it onto a carbon chain, effectively 'fixing' it as sugar; turning air into food. And as everyone hopefully was taught back in primary school, this process releases oxygen, which is good for us but was almost fatal for the life-forms around 3Ga (probably was fatal for some of them). When oxygen isn't being used for respiration, it can be highly toxic to cells. It screws up the internal redox potential, it creates dangerous free-radicals and it precipitates ions out into soluble forms.
Of course the oxygen produced by the photosynthesising proto-bacteria didn't go straight up into the atmosphere right away. There were too many ions floating around in solution to bind to it, and this caused a huge precipitation event; in common terms, everything rusted. Iron was pulled out to form large rust beds, which set down iron ore deposits to be dug up by humanity 2.5 billion years later and used in the Industrial revolution.
The arrival of this new resource (oxygen) lead to a change in the way organisms respired as well. Up until what is sometimes called the Great Oxidation Event (when oxygen started being released into the atmosphere by all the photosynthesising blobs) most respiration was anoxic, probably similar to anaerobic respiration (or fermentation) in anaerobic bacteria around today. This process, while enough t0 keep life going, is around sixteen times less efficient than aerobic respiration. The proto-life-blobs that managed to use the oxygen would therefore have gained a major energy boost.
Over the next 1.5 billion years the atmosphere changed from a highly reducing state (where the early proto-life-blobs developed) to a more oxidising environment. Endosymbiosis and the formation of mitochondria and chloroplasts allowed the first eukaryotes to specialise their metabolism even more. Rather than have the whole cell as a bundle of metabolic redox reactions, releasing potentially dangerous radicals into the cytoplasm, the energy production could be specialised inside it's own compartment, churning out enough energy for the cell to get bigger. Complex intracellular tubules allowed nutrients to be diffused all over this larger cell which would then commit what was from a bacterial point of view the biggest evolutionary mistake ever, and package the cell nucleus away in an inaccessible membrane. (Eukaryote cells then had to develop squishy things like sex in order to regain enough genetic plasticity to actually evolve.)
The effect of oxygen was not just limited to respiration; nowadays many metabolic pathways involve oxygen at some point, including those necessary for the production of sterols (used in signalling molecules and cholesterol, which is an important membrane component), indoles (found in the amino acid tryptophan) and several antibiotics. Oxygen can be an important resource if used correctly.
It's occasionally speculated just why life took so long to move out of the blob phase and into multicellularity. Spending over three billion years as blobs seems a little odd considering that the last billion years involved the branching out of multicellular organisms in a a whole myriad of forms and features, from velociraptors to cockroaches to annelid worms to highly specialised bacteria capable of forming complex networks of bacterial hunting packs. My personal opinion is that all that time was needed simply to get the metabolic background necessary for more complex cellular arrangements. Without the biochemical pathways necessary to generate reasonable amounts of energy, cells have severe limitations placed on their abilities. And biochemically, most organisms are remarkably similar. Differences between the eukaryotes, bacteria and archaea maybe, and plants and fungi have a few different bits of metabolic pathways, but otherwise the internal cellular reactions are remarkably conserved. Not just metabolic ones either; the finely tuned DNA replication machinary, protein synthesis, and even several signalling pathways remain conserved throughout the Kingdoms.
All those internal pathways had three billion years of self organisation and optimisation before they even had to begin to think about making multicellular creatures. No wonder they all fit together so well!
Falkowski PG (2006). Evolution. Tracing oxygen's imprint on earth's metabolic evolution. Science (New York, N.Y.), 311 (5768), 1724-5 PMID: 16556831