"Disco" as most people know it started in '76 with the release of Saturday Night Fever, which brought the whole thing out into the mainstream. Prior to that, "disco" was just dance music that was found in the dance clubs of large cities, many of whom catered to a mostly gay audience. At that time, it was mostly Soul music re-arranged as dance music (for use in dance clubs) and played by full orchestras.
SNF exposed disco to the general public and got "disco music" on the radio in a huge way. The record companies quickly signed many Soul and R&B artists and retooled them as Disco acts, and even many rock, pop, and country bands were pressured to put out disco releases.
Disco clubs, catering almost exclusively to straight, middle-class Americans, sprang up all over to take advantage of the craze. The most well-known of these was Studio 54 in New York, but many of the older, established (and mostly gay) clubs were taken over during the late 70s.
But Disco was far too overhyped, and experienced a huge backlash in the beginning of the 80s. Ironically, what replaced disco was yet another movement that came out of a Travolta movie: the "Urban Cowboy." The early and mid-80s saw discos being converted into "country" clubs en masse, and people transitioned from the Hustle to line-dancing. The BeeGees and Donna Summer were replaced by The Oak Ridge Boys and Alabama.
I remember it all pretty clearly, despite being born in 1970.