History
The first model trains were made during the Victorian era. The first set of toy model trains was made in 1891 by Marklin, a German company that is still in the business today. They were the first ones to make trains with set track gauges, and which owners could add on to. Up until the 20th century, most model trains were powered by the same mechanism that made a clock work. Thereafter, they ran on electricity and steam power. The first model trains made in the United States were the product of a toy company named Ives; other major players included A.C. Gilbert, the company that made the American Flyer line, and the Lionel Company, which is still in operation and has been marketing Lionel trains since 1900.
Types
Model-sized replicas are available of every type of train that was ever built. There are locomotives that look like old-fashioned steam engines and modern diesel ones as well. Model trains are classified by their gauge (or width) and the characteristics of their tracks. The gauge will vary from one manufacturer to another; in most cases, they are not interchangeable.
Features
Throughout the history of the product, each manufacturer has made its model trains a bit differently from the others. American Flyer, for instance, marketed a track with two rails, while Lionel had a track with three rails. If you bought an American Flyer set, you had to buy the extra cars, track and accessories for them as well. The same went for Lionel. Each manufacturer has also made cars that perform specific actions--like a cattle car that can take on cattle, or cars that unload jugs of milk. There are also buildings, tunnels, bridges and mountains that are perfectly scaled for model trains and can be used to lay out very elaborate setups.
Considerations
Model trains can take up a lot of room. The basic sets are small, but very few model-train enthusiasts stay with a beginner set. If space is limited, you might consider making a multilayered setup, in which the trains can climb a gradual grade.
Model trains were designed as toys, but you should consider them to be more than that. Model trains are not only for kids: Adults are very much a part of this world. Consider joining a local model-train club. They are among the best sources of information.
Potential
The model trains of years ago are now collector's items that can brings hundreds of dollars for just a locomotive. There is no reason to believe that the trains made today will not follow suit. Thousands of model trains are made each year, but very few owners take proper care of them, making those that are properly preserved all the more valuable. That is why the older ones are prized: Most of them did not survive. Make sure your train set does, and it will increase in value.