Timor-Leste was a Portuguese territory from the 16th Century until 28 November 1975, when the Revolutionary Front for an Independent East Timor (Fretilin) declared independence from Portugal. Fretilin, a Marxist-Leninist party, briefly formed government before the Indonesian military invaded.

Portugal had once controlled all of Timor, as well as Flores, Alor and parts of what is now Maluku but had ceded these to the Dutch centuries earlier (not all at once). What remained in Portuguese hands was not considered strategically or economically important, probably not even by the Portuguese. Alfred Russell Wallace painted a dilapidated picture of Dili (and of Kupang) in The Malay Archipelago.

For much of its existence, Portuguese Timor, as it was known, geographically consisted of more or less what is today Timor-Leste: (roughly) the eastern half of Timor, plus Oecusse, a coastal exclave in West Timor, and the islands Atauro and Jaco. It was and is predominantly Catholic, unlike any other country in the region, and Portuguese to this day is an official language, albeit far from the most widely-spoken.

Nine days after TL declared its independence in 1975, Indonesian forces occupied the territory and soon after that declared it a new Indonesian province. Fundamentally, Indonesia opposed the formation of a new socialist/communist state in the region. Note that the left-leaning Indonesian president Sukarno had been overthrown in 1965 (nominally remaining president until 1967) and his conservative successor Suharto's New Order regime had overseen purges of hundreds of thousands of alleged communists in the mid-1960s.

Timor-Leste's next few decades were marked by violence between separatist guerillas and the Indonesian military and their supporters. Several tens of thousands of people were killed in fighting between 1975 and ~1999 and many times that died of hunger and illness. International support for an independent Timor-Leste existed the entire time but gained much greater traction after the 1991 Dili Massacre, where more than 250 student protesters were killed. Footage of the killings was shown all over the world.

In 1999, after Suharto himself had been removed from power, the United Nations sponsored a referendum for independence, to my understanding initiated by Portugal and officially supported by Indonesia, now on its way into what's referred to as the Reform/Reformasi era. However, during and after the Indonesian withdrawal there was more fighting, and a UN-sanctioned multinational peacekeeping force intervened. After a transitional period overseen by the UN, Timor-Leste held its first elections in 2001 and ratified its constitution in 2002, at which point it became a member-state of the UN.

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A Brief History of Indonesia by Tim Hannigan provides a decent overview of the political and territorial context from the colonial period through to the recent past. It touches on Timor but is obviously about the archipelago as a whole.

Beloved Land by Gordon Peake is primarily about the early years of Timorese independence (post-2002) but gives a brilliant overview of the Indonesian period.

In Cold Blood: The Massacre of East Timor is a 1992 documentary that includes footage of the Dili Massacre

I haven't read The Malay Archipelago in full as of yet - Hannigan and many others quote it.