The idea that Santa Claus comes down the chimney to deliver gifts is a relatively recent tradition — its spread is mostly associated with Clement Clark Moore's 1823 poem, "A Visit From Saint Nicholas" ("'Twas the night before Christmas...") And, though fire has been the heart of the home for thousands of years, chimneys are only a few hundred years old, themselves. Let's look at the evolution of the chimney.
During the Roman era, some houses were warmed with interior pipes laid under floors and within walls, and bakeries had flues that piped smoke outside the building. But then after the fall of the Roman Empire, all those good ideas were somehow lost or pushed aside. In England, at least, for more than a thousand years thereafter, most people lived in simplistic structures warmed by a single open fire in the middle of the room. That's right — an open fire. Basically some logs (or other combustible organic material — people used whatever was most readily available) on the floor that people cooked over during the day and huddled around for warmth at night. See why they're called the Dark Ages?
If you've ever sat around a bonfire, you can imagine what it must have been like, with drafts pulling flames and cinders this way and that, and then there was smoke, lots and lots of smoke. Windows lacked glass, and most structures were not particularly well-insulated, so enough smoke would seep out that people managed to survive (people also poked holes in the roof for this purpose). But a feature of homes until the Medieval period in England was the constant presence of a thick cloud of smoke hanging around the ceiling beams.
With the Norman Invasion (in 1066) came a new concept: two-story houses. An upstairs meant that you couldn't have a fire in the middle of the floor anymore, and you needed to draw the smoke outside instead of straight up, so the fire was moved to a niche in the wall. (In stone houses, walls were so thick that the excavation of a fireplace did not effect the external appearance at all.) At first, holes were poked in the exterior wall to allow smoke to escape; eventually, flues were constructed to help control the downdraft. During the Gothic era, up to the end of the 14th century, some grander homes installed stone hoods to facilitate ventilation.
Chimney systems were constructed within the walls so that multiple fireplaces could vent through the same flues. Chimney pots were ceramic caps put on top of each fireplace's chimney to further reduce downdraft. When you see a chimney with multiple pots, you can tell how many fireplaces vented to that chimney.
Despite these advances, through the Tudor period in England, many homes still had only a little louver on their roofs, an opening with a raised cover that would allow smoke from a central fire to escape. The tipping point for chimneys really wasn't until the 16th century, when timber supplies fell and coal became more commonly used in the domestic setting.
Coal smoke was toxic enough that coal fires required sophisticated ventilation in the form of chimneys. Because each fireplace required vast amounts of fuel and many hours of maintenance per week, having multiple chimneys on a house was a kind of conspicuous consumption.
Another effect of coal-burning fires was the rise of the chimney sweep. Coal fires produce a thick layer of ash and soot that could clog chimney airflow or even light the whole thing on fire. After the Great Fire of London in 1666, new building regulations demanded narrower chimneys, and professional chimney cleaners started hiring young boys, some as young as four, to shimmy up chimneys and clean out the soot. Not only was this an ill-paying job, it was also dangerous, and sweeps could get stuck inside the chimney or could suffocate in a cloud of ash. It wasn't until the Victorian era that regulations curbed the use of children.
Images: 1 Casa Mila chimneys via Barcelona Kultura; 2 Bayleaf House via places-to-go.org.uk; 3 Image licensed for use on Creative Commons by flickr user Bowbelle51; 4 Lincoln College, Oxford, via Wikipedia; 5 Merchant's House at Avoncroft, c. 1558, via BBC; 6 Hampton Court Palace via Mixcellaneous; 7 Seven-Flue Smokestack, Mechanic's Magazine, 1834, via Wikipedia; 8 Storybook Ranch House, 1953, via Retro Renovation.