Nowadays, a DI-box is one of the most used pieces of equipment both on stage and in the recording studio. Its main purpose is to convert an unbalanced instrument signal into a balanced one to pass it further through microphone cables into any other piece of equipment such as a mixer or an audio interface. It also helps managing ground loops. If grounding is not carefully managed in your setup, a rogue hum can appear around 50-60Hz, which signifies of a ground loop. The longer the cables, the louder the hum will get. Historically, to aid this problem, the instruments were connected through matching transformers. As these transformers didn’t have a common ground, they were used to easily manage the ground loops. This is how the first contemporary DI-boxes came to be.
These, passive, DI-boxes were great at lifting ground, but didn’t fare too well at passing signals. Firstly, a decent transformer is an expensive piece of hardware and to have a low margin of distortion, it had to be big. Also, these transformers were overdriving the instrument signal too much – the resulting sound came to be plain, muffled and colourless. This is the reason why many sound engineers had disliked DI-boxes at the time, preferring to mike the amps instead.