The tea bag was born when customers of a New York tea merchant started using small silk bags containing tea, like infusers. They placed these bags inside the pot, rather than emptying out the contents. The idea caught on and soon the first real tea bags made of gauze and, later, paper hit the market.
Initially, the tea bags came in two sizes, a larger bag for the pot, and a smaller one for the cup. Both the bags had a string knotted on the side. This helped in the removal of the bag. The British, after an initial reluctance, started adopting tea bags after the material shortages of World War Two. The fact that teas bags did not need separate brewing over gas stoves added to their popularity.
The US, where the tea bags were invented, had taken a liking for them much earlier. This was because Americans believed that for tea to taste its best the leaves should be removed from the beverage.
Interestingly, barring a few high-end tea bags, most tea bags are filled with fannings, which are broken tealeaves, or tea dust. This is because tealeaves need space to swell, expand and unfurl. They also need to have a good water circulation around them, which is usually not possible in a cramped little tea bag. Hence, they lack the flavour of loose whole leaf tea.
But this does not in any way take away the flavor of tea. The tea bags still are a great way to make tea. There are many connoisseurs who find tea bags the most convenient, and fulfilling, way to make tea.
A big advantage of tea bags is that it gives the user a chance to make tea of his choice. Those who like light tea can remove the bag after dipping it in water a couple of times; those who like strong tea can keep it floating in their cups for a longer time. The flavor also depends on the mixing of milk. There are some who like to insert the tea bags into water that contains no milk; others want the infusion to occur after milk has been added to water.
Most airlines and railways have adopted tea bags as their preferred way of serving tea. Even international hotels give customers the choice of using a tea bag to make their cup of instant tea.