Charedi is just the term people use to describe Yeshivish or Chassidim as opposed to the prejorative Ultra-Orthodox.
The lines where Dati Leumi ends and where Charedi begins are somewhat blurred as there were people in Israel where I wasnt exactly sure who they were (Peyes are not common among MO in the US, but I did see people who seemed to dressed more modernly with very thick peyos)
The Pograms, persecutions and poverty in the 17th century (And before) were really getting to people and people were losing hope, Them Chelminski massacare were really a major blow. Shabbatai Tzvi came along and gave them hope and when he turned out to be a fraud, people really lost hope. There was a major crisis in Judaism and faith. in the 18th Century the crisis had not abated and Jacob Frank came along and it became worse.
Most people were not able to meet the ideal of torah study all day and so Chassidism came along and said you could still be a frum jew and not have to be a scholar, you could have stories of Rebbeim , Zimirot, Dvekas and still be a good jew. Misnadgish felt this was Kefirah and said they were wrong and made intensive torah study and some other changes were done.
Yes people were religious before this crisis of Faith and they were relgious after the Baal Shem tov and the Vilna Gaon, however some things (not actual Mitzvoh, but some other things) did change so the Charedim of today are not exactly the same as frum Jews in the 17th Century (Shabbos, Kosher, davening, etc are the same)
Im not sure exactly when , but after world world 2, the divisions between Chassidism and Misnadish (now called Yeshivish) began to break and they began to get closer and each took things from the other. (Empahsis on Rebbes became stronger in Yeshivish and emphasis on Torah Study became stronger in Chassidish communities)