Toy trains were altered when Märklin, a German company which specialized in doll house accessories, sought to create an equal toy for boys where a continuous revenue stream could be ensured by selling add-on accessories for decades after the first purchase. Along with boxed sets comprising a train and track, Märklin offered extra track, rolling stock, and buildings offered separately, creating the predecessor to the modern model train layout featuring buildings and scenery in addition to an operating train.
Electric trains adopted, with the first appearing in 1897, made by the U.S. firm Carlisle &amp; Finch. As home use of power became more common from the early 20th century, electrical trains gained popularity and as time moved on, these electric trains grew in sophistication, gaining lighting, the ability to change management, to emit a whistling sound, to smoke, to remotely couple and uncouple cars and even load and unload freight. Toy trains by the first half of the 20th century were frequently made of lithographed tin; later trains were often made mostly of plastic.
Before the 1950s, there was little distinction between toy trains and model railroads–model railroads were toys by definition. Pull toys and wind-up trains were marketed towards children, while electrical trains were marketed towards teenagers, especially teenaged boys. It was during the 1950s the modern emphasis on realism in model railroading started to catch on. Consumer interest in trains as toys waned in the late 1950s, but has undergone resurgence since the late 1990s due in large part to the popularity of Thomas the Tank Engine.
Now, S gauge and O gauge railroads are still considered toy trains by their adherents and are often accessorized with semi-scale model buildings by Plasticville or K-Line (who owns the rights to the Plasticville-like buildings produced by Marx from the 1950s into the 1970s). However, due to their high price, one is more inclined to find an HO scale or N scale train set at a toy store than an O scale set.