There have been several historical publications about the hippie trail recently: a 2014 article "Following the Hippie Sahibs” by Agnieszka Sobocinska, and The Hippie Trail: A History (2017) by Sharif Gemie and Brian Ireland.

Gemie and Ireland posit that the trail was inaugurated by the publication of Jack Kerouac’s On the Road in 1957. Simultaneously, Paddy Garrow-Fisher, a Royal Air Force veteran who had served in India, launched his first overland round trip from London to Calcutta, in a bus with spare parts that he supplied and applied himself. Because the bus driver was also the tour operator and repairman and was doing the work as much for love as money, the price was only £167 including food and lodging, which was extremely competitive and attractive. The sights of the East — Istanbul, Tehran, Qum, and all the cities of India — were suddenly as accessible as the Grand Tour of Europe had been for the 18th and 19th century tourists, and Kerouac’s book pushed less wealthy young people to appreciate travel in a new way.

Compared to earlier centuries of tourists, the desires of Hippie Trail travelers were fascinatingly varied. There was the obvious artistic appeal of the beautiful Eastern cities. The clothing and accessories of foreign lands, such as prayer beads, rugs, and scarves, were brought back to Western countries as proof of travel and status symbol. Many travelers used the journey as an opportunity to experiment with sex and drugs, usually in the presence of other travelers rather than with locals. Some went even further and sought out a religiously transformative journey, which Gemie and Ireland (as well as Sobocinska) note had a lot of presuppositions attached to it and often resulted in failure. There is an entire book, A Season in Heaven: True Tales from the Road to Kathmandu (1998) which is devoted solely to stories from the more spiritually inclined hippies and what they ended up encountering in India, Nepal, and elsewhere. Notably, not only Americans and Europeans but also Australians, New Zealanders and Japanese are represented. (In Japan, the Hippie Trail probably gave rise to the common phrase jibun-sagashi "finding yourself", which is closely associated with traveling to India or other exotic locales.)

On the other hand, and perhaps surprisingly to us in the 21st century, desire to meet the people living in the exotic places ranked last for some travelers. Sobocinska argues that this was a colonial legacy, writing:

the strong in-group dynamic resulted in a profound separation between travellers and locals—so much so that Richard Neville satirised those young people who “escaped” to Asia only to gather in traveller enclaves that felt like the “King George on a Saturday night.” In Asia, the strong in-group identification between travellers began to look less like cosmopolitan internationalism than a reproduction of colonial-era divisions between “European” and “Native.” Dennis Altman observed that travellers on the Hippie Trail “avoided for the most part any genuine confrontation with the reality of Asian society.” Indeed, locals did not typically frequent the hotels and cafes in which travellers whiled away their time, and cross-cultural contact rarely moved beyond the demands of commerce.

Sobocinska concludes that the type of interactions reenforced by travel on the Hippie Trail were often performative of older power dynamics. This could partially be chalked up to linguistic difference, but it became part of the aesthetic for some travelers. Locals, especially in India, seem to have appreciated the cultural curiosity of the Western visitors, but it's hard to characterize the general attitude of the visitors towards the societies they encountered. Travelers who got too close to the locals, such as living with them or working for them, were scolded for “ruining the experience.”

It is apparently well-established that even after the trail closed, it engendered the concept of the backpacker, the lightweight traveler visiting places off the beaten path. If anyone has been to a backpacker neighborhood in Asia, you will probably remember this kind of ethnic segregation in hostels and restaurants, reflecting the dominant predilections of Western backpackers including the older affinities of the Hippie Trail travelers. (Erik Cohen argues in "Backpacking: Diversity and Change" that backpackers are even more frequently conservative than Hippie Trail "drifters.") Writing from a clearly nostalgic lens, Gemie and Ireland do not devote significant space to this important topic, only making a hedging and negative reference to Edward Said’s Orientalism in their conclusion. Their book devotes more space to sex and drugs. (A 2020 review of this book by Esther Konzon criticizes it on these grounds.)

It is true, though, that not everyone rode the trail for appropriative reasons. A professor at one of my grad schools rode the trail in the 1970s. The reason she gave me is that she was in the middle of a PhD program in European literature, visiting Europe for archival research, when she suddenly realized she would rather be traveling. She followed the trail to India, where she wound up in an ethnically mixed Hindu commune and spent the next 20 years living there and reading the entire Mahabharata in Sanskrit. She then returned to the United States and turned down an offer from the University of Chicago, taking a less prestigious position to focus on what she really loves, i.e. the Mahabharata. There were a fair number of hippie travelers who settled down in India, some of them documented in A Season in Heaven as well as in the 2006 documentary film Hippie Masala.

The trail closed in 1979, due to both the Iranian revolution and Afghanistan war as you mention. The number of travelers on the trail is characterized as “hundreds of thousands”, but Sobocinska notes that this could be either on the low end or the high end of that count; exact numbers are unknown. The closure of the trail itself was accompanied by easier access to air travel, and backpacking became a worldwide phenomenon. One of the most popular Hippie Trail guidebooks made a mint for its authors, who founded the Lonely Planet guidebook company.