In medieval days, peasants wore hoods which were great at insulating the head when working in the fields, especially during cold and windy conditions.

However when the working day was done, these hoods were fashioned into hats that evolved into the type of 'floppy' headwear common in renaissance paintings.

In this sense, headwear became more than just practical and more of a fashion statement. They would be adorned with increasingly complex embroidery to better suit a person of a particular status.

Hats as we know them now follow the same trend of being both practical and fashionable. The stetson is an example of both practical usage (blocking the sun from the face, as well as wind - although in this case, better used in conjunction with a bandana) and as a fashionable object, what with being more broad and larger than your average working-man's hat.

In essence, hats of the past are more of a practical item of clothing which - through generational usage and familiarisation - became somewhat of a norm throughout society, surviving even the transition from rural societies into urban ones. Whereby they eventually became part of fashionable attire, rather than something of essential use in an increasingly urbanising environment.

I suppose their prolonged existence into the 20th century was more of a fashionable push as they were seen as a part of the 'full outfit' someone might wear. The decline in the usage of hats in modern society (specifically the majority population which are no longer rural) is most likely linked to the post WW2 period where male fashion was more about standing out and being rebellious - think 'my dad is a square who wears a hat, I want to grease my hair and wear it long instead'.

As we are most likely the age descended from the baby boomer generation (in Western terms), we will have similar attitudes towards fashion. A drive more towards expression of self via fashion and clothing, rather than of a practical nature - depending of course on what occupation and status you are. :)

E: To briefly add to this, this is more of a Western perspective into male fashion. For example, in the Middle East, certain headwear will be for religious reasons - and many people in other parts of the world will still wear hats for mainly practical reasons.