Sheol in the Hebrew Bible isn't really related to hell; it is more akin to the type of afterlife more commonly depicted in Mesopotamian texts as a kind of shadowy existence. There isn't an explicitly outlined concept of eternal reward or punishment in this type of afterlife, although individuals do retain to a limited extent the status they held in life. Later Jewish literature generally follows this trend of rejecting a belief in Hell as it is understood in Christianity with Sheol and Gehenna as places of temporary purification. The explicit extended discussion of postmortem reward and punishment and of eschatology more generally doesn't start appearing until the Second Temple period and then in certain specific genres of literature and it seems that the Christian concept of hell emerged from this background. Why this is the case isn't perfectly clear; one very common argument that probably holds some water is that Judeo-Christian eschatology is a product of Zoroastrian influence. In particular, Avestan texts refer to distinct realms of the righteous and unrighteous and to the final renovation of the cosmos(frashokereti). The tricky part of this argument is that the most detailed descriptions of the afterlife are found mainly in later Pahalvi texts so there's a risk in projecting too much backwards.
If what I've learned is correct (always the chance that it isn't), then the modern version of hell stems from a phrase in the Bible that mentions throwing the sinners into fire and brimstone. This was later taken to mean Hell, while it's been more recently determined that the early church had actually dug pits filled with 'fire and brimstone' to throw their criminals or 'sinners' into them as a death sentence.
You might be interested in a couple of older /r/AskHistorians threads on this topic.
Edit: additionally, there's a new discussion that took place just two days ago on /r/AcademicBiblical:
From what I've always understood, Hell is less like Sheol or Gahenna, which as stated before are temporary, and more fall into line with the Greco-Roman concept of the afterlife, with perpetual torment. Starvation and dehydration despite being surrounded by food, having to push a rock up a hill only to have it fall down again, these are your basic hell-like conditions.