The mediaeval European lute is directly descended from the Arabian oud. Indeed, the name lute is derived from the Arabic, al 'ud, meaning simply the wood. The oud probably began to be played in Europe in the 13th century, and by some point between 1310 and 1340 it had evolved into a distinct western lute. Lutes did not occur in iconography in any numbers, though, until 1380-1400, and so we must assume it was little played until then. Like the oud, mediaeval lutes were played with a quill. This meant that musicians could only play adjacent strings or single lines, which suited the music of the day perfectly well.
Enter the renaissance, starting in Italy in the second half of the 14th century and spreading across Europe in the 15th century. When secular polyphonic music (independent parts being sung or played simultaneously) became the musical fashion, lutenists wanted to play it solo; so in the last quarter of the 15th century they came up with the radical idea of putting away their quills and playing with their fingertips. Now single lutenists could play polyphonic counterpoint on their own, and thus a musical revolution began.
The renaissance lute very quickly became the most popular and esteemed instrument of the period, associated with heaven, losing oneself in a transport of ecstasy, the beauty of its gentle voice and the huge range of music that could now be played on it. It inspired such musical masters as Francesco Canova da Milano, John Dowland, Anthony Holborne and father and son Robert and John Johnson to new heights of musical beauty and inventiveness.
Over time, the increasing musical demands made on the lute meant that the number of courses, and thus the range of notes, increased: from the mediaeval 4 courses to 5 in the 1420s, then to the renaissance 6 courses in 1481. Then extra bass courses began to be added, making the 7, 8, 9 and eventually 10 course lute by 1600.
Renaissance lute playing Prince’s Mask Tune, possibly by Robert Johnson, c. 1620