Tachometers have been around for a long time. Devices to count revolutions were used on water wheels, steam engines and many other rotating machinery devices for the purposes maintaining safe speeds and calculating/monitoring repair cycles.
In the automotive world the tachometer debuted in racecars. Their purpose was to allow the driver to see when he was approaching the limit of the engine's rev and power range, after which the internal parts were likely to encounter destructive forces. Drivers couldn't (and still can't) hear the engine as it approached maximum rpm due to the enormous noise level coming from the open exhaust exiting their, and everyone else's, engines — hence the need for an instrument that denoted the "redline."
The so-called "redline" of an engine was established to make sure it wouldn't be run continuously past a certain revolution limit. Each engine had its own redline, calculated by the builder and based on the balance of internal parts, oil flow, valve train geometry and other factors. The tachometer was the sole instrument that, if heeded, would keep the engine from catastrophic failure.
Starting in the 1950s, "tachs" appeared on sports cars. They were installed as standard equipment on nearly all sports cars because these were the most likely vehicles to be raced or driven to their limits of performance. In almost every case these early tach were mechanical.
Mechanical tachometers are simply cable-driven (or any sort of flexible shaft-driven) meters that use a magnet assembly with an attached needle or other indicator. They are identical in design to speedometers, except that they are calibrated, normally, to show engine revs x 1000. The cable is driven from the camshaft or distributor shaft and its other end turns the central assembly in the gauge. The magnet in the assembly exerts a certain pull on the needle's metal housing, causing the needle to move. The faster the cable turns, the greater the magnetic pull, hence a higher reading on the dial.
Mechanical tach suffer the same disadvantages as speedometers. The cables can twist and break due to poor lubrication. The internal assembly in the gauge can also bind due to poor lubrication and both can make noise after some time. Even working perfectly, the non-linear aspect of mechanical tachometers renders them less than perfectly accurate. They also require extra machining of parts that comprise the drive mechanism.
By the late 1950s and early 1960s, electric tach became the standard in the industry. The main reason they did so was one of cost, since an electric tach can easily cost less than 1/4th that of a mechanical equivalent, and there are no machined parts necessary for operation — only a length of wire. Incidentally, electric tachometers are more accurate, making them far more useful. An electric (or electronic) tach is simply a voltmeter. Instead of reading direct voltage from a wire, however, it reads from the ignition's circuitry.
Since the voltage comes in pulse form from the ignition, the electric tach's needle only moves upward momentarily, following each pulse of current. The greater the number of pulses in a fixed period of time, the further the needle moves, because it is ultimately measuring average voltage.
Properly calibrated, electric tachometers are extremely accurate. If their internal circuitry is designed to limit voltage spikes and extraneous interference, such tachometers are very reliable and will last the life of the car. The only possible downside of electric tach is that, since they are connected to the ignition system, a major short circuit in the tachometer can disable the ignition. This happened to one of the Falcon Sprints during the 1963 Monte Carlo Rally. The driver had to pull out of that portion of the race because he wasn't smart enough to disconnect the tachometer wire. Similar things happened frequently in races during the 1960s until the instruments were designed to prevent ignition shorts.
Oddly enough, nearly every vehicle sold in the U.S. today has a tachometer. SUVs, luxury cars, minivans and sports cars all have them, in spite of the fact that few are likely to be raced or even driven hard.
Even more significant is that fact that tach are no longer needed, even in racing situations! This is due to the advent of electronic ignition systems, engine management computers and fuel injection. Today's vehicles are run by computers that precisely monitor engine speed and will not allow engines to over-rev, no matter how much you might try. It's impossible to push an engine past redline because the electronic management system will simply cut off fuel and the engine will slow down.
Tachometers are absolutely useless instruments in today's vehicles. They are installed for marketing purposes, not for any other reason.