Perhaps it's best to start with a summary of the functions of traffic signs.
It's worth remembering that none of these functions is specific to motor traffic, although this is what we most associate traffic signs with nowadays.
The Romans used directional signs of a sort when they installed milestones along the new straight roads they had built in Britain, giving distances to the next town/military base. When they left, however, the improved infrastructure they had built was left to deteriorate, and the technological advances learnt were forgotten. So the roads and signing fell into neglect. Some fingerposts, giving directions and distances, were erected by private individuals, and there was no standardised system. The reliability would have been dubious too.
Things changed in the 18th century when the General Turnpike Act of 1773 was passed. Under this, Turnpike Trusts were responsible for maintaining the roads using money collected via tolls. Fingerposts had to be erected along the route, and milestones were also installed for the purpose of calculating the tolls payable. There are still a few of these milestones around on the trunk roads - made out of cast iron, and giving the distances to the next town in each direction. I'll try and get a picture of one some time.
Until the mid-19th century, roads were only used by pedestrians, and people travelling on horseback (or being pulled along in a carriage by a horse), so they were sedate affairs. Nothing would be travelling at more than 10 miles per hour. However, the coming of the bicycle changed all that: bicycles were fast and dangerous, both to their riders and to other road users. This was especially true with the roads in such a bad state of repair. An organisation called the `Bicycle Union', which represented cyclists, took it upon itself to install danger signs at sharp bends and steep hills (with a skull and crossbones for the worst hills!).
Something else that happened in the mid-19th century was the advent of railways and canals as alternative modes of transport. Roads were not unaffected, as they had to cross railways and canals by means of bridges, built of stone or iron. These frequently had weight restrictions, and so the railway company would erect weight restriction signs.
The combination of signs for cyclists, weight restriction signs, and direction signs erected by local authorities meant that there were about 4,000 signs on British roads at the end of the 19th century. They were not of standard design, there were no regulations to restrict their use, and they were becoming so common that they were ignored by road users! The arrival of the motor car, and the abolition of the `red flag' law in 1896, meant that there was a new kid on the block. Motorists would need more warning signs, as they could travel much faster than cyclists and horses. With more road users, roads would become more dangerous anyway.
In 1903, the Motor Car Act made legislative provision for local authorities to erect their own warning signs. The design, specified in a subsequent Circular (1904), was standard - a hollow red triangle meaning a hazard, a solid red disc meaning a prohibition, or a hollow white ring meaning a speed limit, above an explanatory plate. You can see some of these signs, as well as some later designs, on the following page.
The number of signs appearing on the verge continued to increase: the motorists' organisations the AA and RAC erected their own signs, giving directions and warning of hazards. The official signs were also spreading around the country.