According to the information I have come across, this is how the classifications have gone over the years:
In 1902, the National Association of Professional Baseball Leagues was formed
with the following classifications: A, B, C, D.
In 1912, the classification of AA was established as the highest classification,
the system then becoming: AA, A, B, C, D.
In 1936, the classification of A1 was established between AA and A, resulting in the following levels: AA, A1, A, B, C, D.
In 1938, the classification of E was established to be the lowest classification,
creating: AA, A1, A, B, C, D, E. (Note: The only Class E league ever was the Twin Ports League of 1943. Officially, the E classification may have been officially removed later than 1946, but for practical purposes it can be considered to have been removed then.)
In 1946, the system was restructured with AA leagues becoming AAA and A1 leagues becoming AA; the system now looked like this: AAA, AA, A, B, C, D.
In 1952, the classification of Open was established for the Pacific Coast League to help it become a major league: Open, AAA, AA, A, B, C, D.
In 1958, the classification of Open was removed when the National League moved into Los Angeles and San Francisco. The system reverted back to: AAA, AA, A, B, C, D.
In 1963, the system was radically restructured into the following: AAA, AA, A, Rookie.
In 1965, the Class A Northern League began playing short seasons, effectively creating the Short Season A classification (though it may not have been officially called that until later): AAA, AA, A, Short Season A, Rookie.
Around 1992, the A and Rookie classifications were split into Advanced and regular levels, creating the system in use today: AAA, AA, A Advanced, A, Short Season A, Rookie Advanced, Rookie.
Prior to 1963, the classification level of a minor league was determined by the total population of all the league's member cities. In 1902, this was how the initial categories were broken down:
A = 1,000,000 and over
B = 400,000 to 999,999
C = 200,000 to 399,999
D = up to 200,000
So, if a league had cities which had an aggregate population of 700,000, it would have been classified as a B class league.
These totals were adjusted over the years as cities grew.
In 1936, the A1 classification was created by adding a population bracket inbetween A and AA. This resulted in the upper levels being determined like this:
AA = 1,750,000 and over
A1 = 1,450,000 to 1,749,999
A = 1,000,000 to 1,449,999
In 1950, the classifications were determined by the following population totals:
AAA = 3,000,000 and over
AA = 1,750,000 to 2,999,999
A = 1,000,000 to 1,749,999
B = 250,000 to 999,999
C = 150,000 to 249,999
D = up to 150,000
In 1952, the Open classification required the following to be true in order for a league to receive that classification:
- average paid attendance of at least 2,250,000 for the five seasons preceding the application
- total population of the member cities of at least 10,000,000
- combined park capacity of at least 125,000
For a league to have received a major league classification, it needed to have the following:
- average paid attendance of at least 3,500,000 for the previous three seasons
- total population of the member cities of at least 15,000,000
- each park had to have a capacity of at least 25,000
- the league had to consist of at least eight teams playing a balanced schedule of at least 154 games