Railway modelling began to develop since the middle of XIX century when the bursting construction of railways took place. The interest towards modelling became popular in England and then in whole Europe.
In the beginning, models were taken as a toys but gradually the demand towards the better quality was rising. Amateurs of railway modellism began to build up communities.  
First such communities appeared in England, where aristocracy joined the clubs.
Initially, models turned out in small craftsman's enterprises. Since 1891 models were produced on commercial scale by German company Märklin, which established the standards of railway models. In 1897 American company Carlisle & Finch produced first electric railway.
With the development of technologies also improved the engineering of models. For example, early primitive models had spring-loaded or simplified steam-driven engines, but later models were provided with electromotors and even electronics to control trains.
The major burst of this hobby took place in 70s of the previous century.
At a later time with the development of computers interest towards railway modelling slightly decreased. At the moment there is about 1000 producers of railway models in the world. Besides railway models (locomotives, wagonages, rail-tracks, etc) companies also produce accompanying items: buildings, transport, trees, mountains with tunnels, military equipment, electronics. Many people have interest exceptionally towards landscape miniatures, not the railways. USA and Germany are the leading producers of railway models. And that is not surprising, cause in these states models have their maximum growth. Such countries like England, France, Austria, China, Italy, Japan and some others also produce railway models.
Majority of models have the standard of NEM (Normen Europäischer Modellbahnen) worked out in Germany or NMRA (National Model Railroad Association) worked out in USA.