Carols have been sung since the 4th century but it was Saint Francis of Assisi who introduced carols to church services in 1223, during a Christmas Midnight Mass in a cave in Greccio, in the province of Umbria in Italy. That night, the songs and music that accompanied this sacred event were not hymns but carols. Ever since then, carols caught on with the masses and were at their prime in the Middle Ages, when they were almost always a part of the mystery plays.
Before carol singing in public became popular, there were sometimes official carol singers called Waits. These were bands of people led by important local leaders (such as council leaders) who had the only power in the towns and villages to take money from the public. They were called Waits because they only sang on Christmas Eve (This was sometimes known as watch night or wait night because of the shepherds were watching their sheep when the angels appeared to them.)
The word carol comes from the Greek dance choraulein, which was accompanied by flute music. It later became popular with the French, who replaced the flute music with songs. They called it caroller, which means dancing around in a circle to song. As the years rolled by, music and lyrics were included and hence the modern Christmas carols.
One of the urban legends states that carol singers were named after a little girl named Carol Poles. The story begins that Carol was reported missing around Christmas in 1888 in the Whitechapel district of London. Many people went searching for her that night. At that period people were scared of Jack the Ripper, an unidentified serial killer who was active in that largely impecunious area. Therefore the group would sing Christmas carols when they knocked at each door to declare their good purpose. Thus it came to pass, that the tradition was followed from then on in the Christmas Eve.
It is more likely that Christmas carols were derived from folk songs or wassailing songs and that early carols were performed by bands of men and boys who went house-to-house, singing for mulled cider or wine.