I have no idea when the current “system” started, I too grew up thinking tip/tip amounts were based on service received and my mother’s family had a restaurant. My mother and aunt were the family tip experts, from their restaurant experience and both were adamant that tips were earned. If your server went out of their way, or you had messy children or other issues they had to deal with you over-tipped. If someone was a complete fail as a server you could/should stiff them, the idea then was slackers would not be able to make a living as a server and could be replace by someone who was willing to hustle.
At some point restaurant owners decided tips were part of wages (some blame the IRS) and started a system where tips are considered part of wages, in many places shared and not given to the “earning” employee individually. It doesn’t make sense to me- if I get crummy service I would like to know I can give that message in no tip/lower tip. If I do that then other workers that do work hard and go the extra mile will also be punished for the slacker.
At this point tips have no meaning- so should be done away with. Restaurants should raise wages accordingly and it would be a more honest system.
I almost never go to restaurants where the tip is automatically added to the bill. I’ve had 15% tacked immediately to our bill when the waiter was an a-hole.
Almost never, unless the other party or everyone chips in but I have cheapskate friends and they even balk at it.