What is the story or reason of how 龙 came from 龍?
TL;DR



Long Answer

From the oracle script to the seal script, character 龍 evolved from simple to complex. The seal script was already very similar to 龍.


However later, variants (there were too many!)  and 尨 appeared:


  Dictionary 集韻 (1037 AD)
  
  
    古作[...](帝+尨). 
    
    The ancient forms for 龍 are [...] (帝+尨) [...].
  
  
  
  
  Dictionary 金石文字辨異 (1810 AD)
  
  
    尨: 隋龍藏寺碑
    
    尨: appeared in the inscription of Longzang Temple (Sui Dynasty, 581–618 AD).
  
  
  


And after the establishment of the PRC, 尨 was further simplified to 龙.