You are taking on a seriously large project. As a DJ, however, I've got to jump in and answer. I actually wrote a friend of mine who runs an electronica label, so this answer will be part myself (HF Trinity) and part him (Jaya Prime). I'll separate the two if you want to use quotes from an actual producer and a DJ. You mentioned DJ and "scratching", so I'm under the assumption that you mean the advent of electronic music and the transformation of clubs.
Jaya Prime: "Without going back in music history too far, disco has to be mentioned. The jazz clubs of the 50s and 60s are closing, people are losing interest, but the closed clubs are still there. Then New York decides to take the jazz club and go the direct opposite direction with it. Jazz clubs were dark, smoke-filled places where people came to talk and often cut deals in the dark. In these same buildings, suddenly there was light everywhere--the floor and ceilings and walls--and the music was too loud to talk over. It was for dancing only, although I hear it was still smokey. About mid-70s it is on the radio stations and dominating the club scenes. What killed disco was rock in the 80s. Crowds left the club and went to concerts. Disco artists either could not get paid or went to rock themselves."
Jaya Prime: "Rewind. Something else started at about the same time that disco was taking off, only it wouldn't become very popular until disco began to die--Kraftwerk."
HF Trinity: "My noble editor role is kicking in. I have to give some real justice to Kraftwerk. Nearly everyone who's anyone lists Kraftwerk as an inspiration. They've been covered by U2, Coldplay, Duran Duran... sampled by Jay-Z, Gary Numan, Depeche Mode... I was surprised by some of the influences I found on Kraftwerk's Wiki."
Wiki: http://en.wikipedia.org/wiki/Kraftwerk
Jaya Prime: "Kraftwerk took electronic instruments, previously used in cinema and on television, then combined them with vocoders and an electronic beat. Combined with others, the transformation of Frankfurt, Germany into a club city began. People began dancing to music made electronically. There was no name for the genre back then. Now the genre they dominate is called minimal or minimal-techno. They combined their music with simple lighting effects, such as color-changing plates. This type of music spread thru Europe in the late 70s. It wouldn't come to the states until the death of disco."
Jaya Prime: "While disco was dying in New York, a new type of music began spreading in Chicago. What Kraftwerk and other electronica groups had established was that a steady beat, such as 120 beats-per-minute--BPM--meant that mixing one song into another one became very easy. Chicago House music built on this idea, making records of very stable beats within the range of 120bmp to 134bpm. Opinions vary on this, but producers still call 120bpm songs 'Chicago House'. House music is commonly called 'uhn-tiss music' because of the constant beat, beat, beat structure. The beat changes very little, but it got people into clubs in Chicago and it got them dancing. It's still popular in clubs everywhere."
HF Trinity: "House music was kinda urban as well. Early house had jazz instruments, samples from soul singers and other elements picked up right outta the old jazz scene. I wasn't clubbing at age six, so I wasn't there, but I bet that sound got a lot of the people into the clubs from nostalgia. It also sampled only the best of jazz, so you get the cream of the crop combined with a new sound."
Jaya Prime: "On a technical note, house music was made possible by the invention of the drum machine--the Roland CR-78. This machine let bands program beats for it to synthesize while they focused on instrumentation from keyboard synthesizers and microphones, the latter usually run thru a vocoder. Being able to program the beats meant that they could be mixed exactly and their would be little way to pick up a difference in the sound."
Jaya Prime: "To talk about beat-mixing--also called beat-matching--it is best to talk about train-wrecking. When two beats don't exactly match up, you can easily hear the different beats as they thump off-time. It creates a fingers-on-the-chalkboard effect and can easily ruin a DJ's name if they mess up this bad. The human ear can easily pick up on small differences, especially in a club where everything is louder. If the DJ is doing their job, then a dancer shouldn't even notice that the beats for a song are being mixed until the chords and voice from the new song start replacing the old song. It is when a DJ is not doing their job that dancers notice. Dancers do not forgive easily, so most DJs practice beat-mixing to perfection until ever going live."
HF Trinity: "Who doesn't know Rapture by Blondie? That's completely a beat machine, a synth and her singing. She's even using that first Roland. Pretty good for a Playboy bunny. Chicago house mixed in a lot of the 80s bands that were using Rolands... Genesis, Peter Gabriel... European electronica using beat machines... then the standard issue soul-inspired house records themselves. Mix them all together and you've got the 80's underground scene that started in Chicago."
NOTE: Just lost Prime. It's about to be the weekend and a crazy one at that as summer gets started. He sent me a lot of snippets to toss in about your opening questions. Downside is that I'm the less organized one, but I know my Wiki entries in place of experience.
HF: "Hip-hop had been dying since the jazz days. What no one debates is who brought it back to life... Run-what-the-hell-just-hit-my-ears-DMC! They released 'It's like that' in the early 80's and reanimated the old corpse that was hip-hop. You can hear the beat-box and synths in the track, completely programmed so that they were free to pick up mics and rap over the programmed sound. With their success, other hip-hop artists joined in the electronic craze to program their beats and sounds and put the focus on the microphone."
HF: "Gangster rap is where sampling got real popular. With sampling, you loop a part of a record (usually the catchy part) and beat-mix it to a drum machine or over another record. Most early gangster rap sampled soul songs, disco tracks and even jazz records. They were banned on radios and from playing some cities, but the DJs started spinning their records into house music sets. Since the late 80's, hip-hop and house have dominated the American club scene."
HF: "1990 kicked off with a more modern spin on sampling. MC Hammer sampled Rick James for his song 'U Can't Touch This', then Vanilla Ice sampling Queen and David Bowie for his song 'Ice Ice Baby'. Both were huge. I've gotta admit that I jammed out to both of 'em. They were also criticized for how much they used samples, but it was too late. Sampling became a part of rap, hip-hop and club music. In fact, the use of sampling became a signature for what became known as club music. Club music usually just means a remix of a top-charting song so that it fits within the house music bpm-range. Sampling created a lot of legal issues as well. Now, most artists pay a license fee before ever using a sample when making a song. Otherwise they risk court fees and royalty payments as long as their track is making money."
Etienne de Crecy mixing acid house
Jaya: "When London got hold of Chicago house, producers began blending the music with more heavy synthesizers. It was popular in Europe. It became so large that the clubs were too small for the growth of the scene. This gave birth to the rave scene at the turn of the decade. The 90s meant music had left the clubs and was being held as festivals outside of the cities or in warehouses. The lyric-free synthesized music that became popular is known as acid house or simply 'rave music'. The size drew so much attention that the authorities got involved. Drugs had always been a part of the scene, but the drugs gave the authorities a way to make the scene illegal."
HF: "Drugs can't be removed from the rave scene, the disco scene, club music... whatever. Not everyone used them... but almost everyone. The same's still true. When big brother cracked down, the rave scene went underground. That's where you get parties happening in abandoned warehouses in the middle and late 90's. A few DJs, some promoters and a handful of music lovers scout a place out... then work out the technical details and set a date. They network out a message with directions to get to the place. Man... some directions were so cryptic that you wouldn't make it. Cell phones made things easier, as promoters would give directions on-the-fly. You get a ring and find out there's a party in a few hours. If you can make it, you ring back and find out what number to call for directions. Good stuff. Good memories. Entirely illegal... the properties may have been abandoned, but the lots were still owned and sometimes even patrolled. They were famous for being busted by the cops after only a few hours."
HF: "Electro is pretty much what all modern dance music is. Daft Punk's album Discovery came out right before the year 2000 and all the craziness that the year's end had in store. It carried the signature heavy synths that Europe was famous for, but used a vocoder to distort lyrics as well as instruments. Their sound was easily inspired by 80's rock... but with a club spin to just about everything. The final element to electro (on top of heavy synths and vocoders) is the beat, which centers around 128bpm and is heavily distorted. The bpm can range about 10bpm in either direction, but it was faster than most house and much more catchy."
HF: "Electro spread with the quickness since the turn of the millennium. Producers like Justice and Yuksek have a part in many bands outside their own. Groups like Crystal Castles and Cut Copy may as well define the current dance scene. Spin-offs from electro (electro-punk, electro-rap) mix just as easily into house as they do electro, making club scenes that cater to the part of the city they're found in."
This is a bias history, straight-up. It's too big to be anything but biased. To answer some of your specific questions, I'll grab Jaya's snippets and fill in my own, then pull in some Wiki articles.
What is dance music?
HF: "Dance music is defined by having a predictable beat-per-minute, often looped four-times before changing beats or instruments. This makes it easy to change the pitch/speed of another song to match the song that is currently playing. Once beat-matched/mixed, the volume on a second record player (or CD player, or laptop) is increased so that the new song is merged with the song that is already playing. Often, a cross-fader is used to lower the volume on the current song while increasing the volume of the new song. If the beats match (as well as the harmonics), then everything sounds like a smooth progression. If the beat or harmonics or lyrics don't match, then this is where you start losing listeners. Missed beat-mixing's called a train-wreck."
How is it used?
Jaya: "Electronic instruments and electronica tracks form the backdrop of all modern rap, hip-hop, R&B and club music. While most film uses electronica that is not meant for dancing, films like Heat and The Bourne Identity use dance, house and electro to enhance a film's energy. It's used by DJs when they mix sets at a club or as a mix-set on a CD."
Where is it used?
Jaya: "Dance music is played in clubs, at festivals, in cinema/television and on iPods. There are clubs in most major cities, each catering to different genres. Some of the most popular festivals are Burning Man, the Detroit Electronic Music Festival and the Winter Music Conference. It is also a part of outdoor venues like Coachella and Lollapalooza. A form of the rave scene still exists in psytrance parties. These often happen outdoors and far away from cities. The most famous annual psytrance festival--Goa--is in Goa, India. Drugs are not necessarily legal there, they simply don't enforce the laws where the festival takes place. Finally, computer games have sold sountracks for their games based using well-known electronica artists."
Terminology:
Track: A single musical selection on a record, CD or as data. The term is preferred in place of "song" because song means "lyrics" to most people. A lot of dance music doesn't rely on lyrics.
BPM: Beats-per-minute. How many bass-beats a track has in a single minute. Some early artists used a metronome to measure the beats. This was replaced once artists could program the beats using beat machines and print the bpm right on the record. Modern mixers and laptops automatically read the bpm. Some even will automatically adjust the pitch of a track to match the bpm of another track.
Turntablism: Turntablism, also known as "scratching" or "freestyle", means messing with the records as they play so that they create dramatic changes in how a sample sounds or how a track plays. Hitting the records, rewinding them and adjusting the volume or equalizer are all forms of turntablism. Cut Chemist, DJ Shadow, RJD2, DJ Qbert, MixMaster Mike, DJ Skribble and more are all well-known turntablists.
House: Also known as Chicago house. A four-by-four beat ranging from 120bpm to 134bpm. Heavily influenced by disco, soul and jazz music.
Four-by-Four: Tracks are commonly produced in loops. The beat is programmed in sections of fours. That means you can count the start of a beat, then the start of the next beat. After four counts, if you count the fifth beat, you will notice that the instrumentation changes... often even the beat itself. Once you've heard it, you can count any modern song off by using a four-by-four beat. Knowing when the music will change, combined with the bpm, makes mixing as fluid an art as it is.
DJ Set: Also called a "mix-set". This is just the term given to multiple tracks mixed together into a single "set". Most often it's how a DJ refers to a CD they've put out that contains tracks from various artists mixed into a single whole. You can also call a DJ's live performance a set.
Mixing: The core of DJing. The beat for a new track is slowed or sped up (called a pitch-shift or pitch-change) so that it matches a track that is currently playing. The volume for the track is zero when it comes to the speakers the audience hears, but a second line is running to the DJ's headsets so they can hear the beat. Once the beat is matched, they can then mix the new track into the current one by raising the volume on the new track and lowering the current track's volume. This is also called "beat-matching".
The Mixer: A mixer is a device that controls the volume for multiple devices. It is that box you see in the middle of two record tables (or CD mixers). The most common configuration has headphones plugged into it with two mixing tables. The volume-out to the headphones from both tables is set at a hundred-percent. The volume-out to the speaker system the audience hears is often changed by the DJ so that they can only hear one track, or by changing the equalizer on the mixer so that they can only hear the bass or tenor of a track that is playing.
Tables: Records tables and CD mixers are both called tables. There are usually two, although DJs like Badboy Bill and Carl Cox are known to use three tables. The tracks they are playing all output to the mixer, where the DJ can control the volume at-will.
Wax: The most common term for a record in the DJ world. Even though most DJs have moved to CD, you'll still hear their discs called wax. Some DJs are already pulling out laptops instead of tables. The term for mixing data on a laptop is traxx in place of wax, maintaining a feel of the old in the new.
Genres:
Jaya dropped this great link earlier. It's a Wiki on almost all the current genres of electronica. Here's the link:
http://en.wikipedia.org/wiki/List_of_electronic_music_genres
I would like to see the final paper if you have the chance. I can be contacted on my profile page here on Yahoo Answers. I'm a part of an ATX underground group of mixers, producers, promoters and artists called The HF. One of our online outlets is on Blogger here:
http://adhdrevolution.blogspot.com/ [you are here]
Jaya is an owner and producer for the T.Rex DigiLab. They're not underground at all. Here's their site:
http://www.trochlearrex.com/
For more, here are some of the Wiki entries that should help:
http://en.wikipedia.org/wiki/House_music
http://en.wikipedia.org/wiki/Rave
http://en.wikipedia.org/wiki/Dance_music
http://en.wikipedia.org/wiki/Electronic_music#Rise_of_popular_electronic_music
http://en.wikipedia.org/wiki/Daft_punk
http://en.wikipedia.org/wiki/Electropop#History (possibly the most relevant to modern dance music)