Capsicum (peppers) are native only to the Americas, and prior to the Columbian Exchange (such as in 1400) existed only there and nowhere in Africa or Eurasia. And even then almost exclusively in South and Central America as well. Cultivation and integration of peppers into cuisine did diffuse astonishingly rapidly around the world, however. Within the Americas peppers have been cultivated and eaten for many thousands of years, domestication is thought to have occurred somewhere in the current area of Mexico perhaps more than 10,000 years ago.

"Stunt peppers" are a very modern invention, dating back only just to the last two decades. Previously, the hottest peppers were habaneros and scotch bonnets. There is evidence of habaneros having been used going back to about 6500 BCE, and they were the hottest known cultivars until extremely recently. And throughout that time they were considered "enough".

The history of stunt peppers and stunt hot sauces is much more recent. Hot sauce as a formulated, bottled, and branded item began taking off in the 19th century, increasing in popularity in the early 20th century. There are lots of little inflection points in this story, and notable brands as well (tabasco, franks red hot, etc.). Of note is the increasing spread of consumption of spicy foods within the US and Europe. This led to a surge in popularity of particularly spicy hot sauces starting in the '80s and '90s. However, you don't need particularly spicy peppers to make extra spicy hot sauces. In the most extreme case you can chemically separate pure capsaicin from peppers which you then use to dial the heat level of the sauce to whatever you desire.

The "arms race" in stunt hot sauces probably kicked off the search for hotter peppers as well. Partly because it allows for creating stunt hot sauces in a much easier way. Even a pure habanero slurry is only so hot, so you need other means to kick it up (like pure capsaicin), but that changes the flavor profile and in particular makes the experience mostly just painful and less flavorful. With hotter pepper varietals you can make more "natural" hotter hot sauces which have either similar or more "interesting" pain experiences but also better flavor profiles. Initially folks tried to find individual plants within existing varietals (particularly habanero) which were hotter than average, but then people started selectively breeding (and hybridizing) plants to come up with even more extreme forms. But, since that part of the story lies mostly within the last 20 years it's out of scope in this sub-reddit.