Vodka has been produced since the origins of the still in the 8th Century. It was initially a relatively low alcohol spirit that took the form of Breadwine or "Burned Wine".
Now, it has reached popularity as a clear, 40% ABV spirit, mostly made from grains or potatoes, and is regularly drunk neat and chilled as an aperitif in many northern and eastern European countries, nicknamed the 'Vodka Belt'.
In the modern day, vodka is made from a high strength distillation (around 96%) of sugars from grains, potatoes or sugar beet, which is then diluted with water to a minimum of 37.5% ABV in the EU, and 40% in the USA. Other sources of sugars can be used (such as left over grape musts from wine making in southern Europe), but these must be clearly stated for any vodka spirit sold in the EU.
Within the Vodka Belt, countries like Russia are renowned for their passion for this spirit, as it makes up almost 70% of their alcohol consumption. It has a long, and rather politically charged, relationship with that part of the world.
Neat vodka is a popular drink throughout the world, but it is also heavily used in mixers and cocktails because of its minimal flavour profile, allowing it to carry the flavours of other ingredients very well. There was a craze for flavoured vodkas throughout the nineties with lots of odd, confected flavourings. Thankfully that has subsided slightly, and the reputation of this ancient spirit can only be helped by this.