Here, Just read the textbook!

Ninja, A Past recollected.

Shonobi, at the dawn of their existence were secretive. Living on their own as a family, each clan's village hidden away deep in the mountains where most normal men could not venture.

It was this seclusion, and their own unique abilities that lead to the rumours of Ninja being otherworldy assassins, sent from the heavens to earth by winged Tangu gods, but none of this was true. They were simply men who ignored the Samurai code of Honour, and were more at peace with themselves and their own sins, as a means of life.
Even the Kanji for Ninja, is the Kanji of Sword over Heart.
It can be read as something of the sort; "A sword before one's heart", or "Sword peircing the Heart" which embodies the mind of a Shinobi and their way of life. Whatever it takes, they will keep living.

As long as they have existed, they have been the weapons of those who would hire them. It would be a long time before any village called itself after it's country however. They were known by the family names, their Clan, and each held their own amount of respect among ninja, just like the Samurai did to one another.

Shinobi did whatever would give them an edge in a fight, things Samurai would consider cowardly or dishonourable, and the Ninja were willing to accept the weight of their sins, and any sin that may befall them if it meant doing what needed to be done in order to live through tomorrow.

Back then, the ranks as we know them; Genin, Chuunin, Jounin, had a completely different meaning. They were not ranks based on experience, but on blood.
Jounin, were those of purest blood, the next in line to become a cheiftan of their Clan, they were the ones who represented the Clan, and who decided whether or not a mission was acceptable. If they felt it was, the objective was given to a Chuunin.
Chuunin, planned the mission and researched surrounding areas, to determine how to go about any number of tasks.
Genin were lower family house members in a clan of low standing, who did the dirty work, carried out the missions as per the Chuunin's instructions and succeded, or were killed trying.
There were no Kage to lead a village, and all able bodied children in a village were all trained in the Shinobi martial art from the age of three. No exceptions.

That was the Way of the Shinobi.


The time of the Warring Clans

In the time of the "Warring Clans", Shinobi fought against one another in their own countries, as well as neighboring countries, acting on small, personal behests, seeking to further their own benefactors towards the title of Daimyou, and aspiringly, towards the title of Emperor. After roughly 200 years, no one man had come any closer to becoming an Emperor. Many clans, both those of Samurai and Shinobi alike were birthed, and buried in this time, many of their secrets lost along with them.

One man, a wealthy Samurai noble named Toroumoto Daisuke held an audience with the Jounin of all the Shinobi clans of Fire Country. Knowing the state of decline of Shinobi in the Fire Country, He turned them to one another, and paid them to form alliances, knowing that without finding a way of increasing their number, they'd be wiped from history. 300 years ago, marked the founding of the first Shinobi village as we know now, Hidden Leaf Village.

It was a merger of the three Great Clans of Fire country. Those clan's whose blood is now only a part of history. Other clans joined them until eventually, all Shinobi clans were one, and worked as one Hidden Village for the sake of the man who would become the first Daimyou of Fire Country, using his Samurai and Shinobi, to wipe out those who opposed him, swiftly, and without remorse.

The Hidden Leaf completely recreated the Shinobi Heirarchy, and began to war with their neighboring countries.
The seperate clans of Shinobi they were against were poorly organized, and too spread out to efficiently protect their own employers, who one by one, were being trampled under the path of the Fire country, and it looked as if the Daimyou, Toroumoto Daisuke would use his personal Shinobi legion, and battalions of Samurai to take over the countries, and declare himself Emperor.

But Hidden Leaf served as the ember to ignite the roaring flames of determination in the hearts of men everywhere. One village, lead by one Ninja, A "Hokage" who took the role of Jounin, deciding to accept or decline missions, in direct servitude of the Daimyou, and made all titles, merely a rank of skill. They were no longer poor, hungry merchants of death from the shadows, they were organized, well employed and did not fear execution on sight as most shinobi had in the past.

The wealthiest Samurai of the countries each followed his example and did the same, hiring many Clans as one, and joining them together as their own personal silent, shadow armies to bolster their own military power.

From this Revolution were born the Five Great Villages, Leaf, Mist, Cloud, Sand, and Stone.