Peisistratus, an Athenian tyrant, took advantage of an existing agrarian/rural festival to Dionysus at the end of the god which included prizes for tragedies
It developed as a dramatic festival, within a political and religious setting, which also highly competitive
It was a four-day festival held in march
There was a religious procession bearing the image of Dionysus to the theater - he was present watching the performances; there was sacrifices of animals in the theater itself, and priests of Dionysus had reserved seats at the front of the theater
All through the Greek countryside were circular threshing floors, for processing grain - separating the kernels from the chaff. These were convenient places for worship - where an image of a god or an altar could be placed and hymns and dances in their honor performed
Competitors had to conceive the Archon - sort of 1 year position as mayor - to select them. He only chose three competitors. It is not known how the selection was made - perhaps on reputation or initial performance of some songs or dialogue from the plays