The name of the doll is a diminutive form of the name "Matryona". In pre-revolutionary Russia, it was a female name, most popular in peasant families. It was derived from the Latin root 'mater' which means 'mother'. This name is associated with the mother of a large family who was a plump healthy woman. In the west, the doll is often referred to as a 'Russian doll' or even 'babushka doll' which is wrong because 'babushka' means grandmother in Russian.
It's hard to imagine that matryoshka didn't exist until the late 19th century. The first Russian nested doll set was carved in 1890 in Abramtsevo estate which belonged to Savva Mamontov who was a famous patron of arts. Many artists lived in worked in the estate. The doll represented a girl wearing a traditional dress holding a rooster. The smaller dolls inside were boys and girls and the smallest was a baby. The first matryoshka was carved by Vasily Zvyozdochkin from a design by Sergey Malyutin who painted the doll. There's a legend that the Russian artist was inspired by an old Japanese doll fukuruma which was also a nesting doll portraying a bald Buddhist monk.
In 1900, the Russian doll was presented at the World Exhibition in Paris, where it received a medal and international fame. Since that moment many people in Europe got interested in the Russian doll and wanted to have this souvenir from Russia. The first matryoshka production started in Sergiev Posad, a Russian town famous not only for its Trinity-St.Sergius monastery but also for its skillful masters. Sergiev Posad was an old Russian center of wooden crafts. When matryoshka appeared to be in such high demand the masters from Sergiev Posad managed to replicate the first matryoshka and soon new designs of nesting dolls were developed.
The whole set is made from the same piece of wood to make sure that wood reacts in the same way to changing humidity and temperature conditions. The most common material is lime and birch.
If a master my mistake damaged one piece then the whole set (it could be seven, ten, or even more pieces) is spoiled. Each doll is painted by hand and covered with as many as seven layers of lacquer.
Modern artists create many new styles of Matryoshka dolls. A very popular is a set of Russian and Soviet leaders including Putin, Medvedev, Yeltsin, Gorbachev, Brezhnev, Khrushchev, Stalin, and Lenin. Other popular themes include floral, religious, animal collections, portraits, and caricatures of famous politicians, musicians, athletes.
A great place to buy matryoshka is Izmailovo Souvenir market or Sergiev Posad which is included in our Moscow in 3 days tour.