The idea of a Masquerade Ball goes back to late medieval court life.
Often a feature of the Carnival season in the 15th century and in Italy during the 16th century Renaissance, they were often elaborate dances held for members of the upper classes. They were particularly popular in Venice where elaborate masks were traditionally worn with decorative beads matching in color.
Masquerade Balls grew into popularity by the time of the Renaissance enabling nobleman and servants to interact under the cloak of disguise, the popularity was very much about the freedom wearing a mask gives you.
The guests would wear both a costume and their masquerade mask, and as you can imagine, the anonymity this provided to a class that were governed by the strictest etiquette and constricting rules of behavior was irresistible.
Historians have often noted that the Masquerade Mask has a long history of being worn during promiscuous activities.
A new resurgence of Masquerade Balls began in the late 1990s in North America thanks to the popular movie 'Eyes Wide Shut'.