At that time, Britain as we know it did not exist. 
Instead, the islands were a mess of kingdoms and warlords, constantly fighting
among themselves, and religiously an absolute disaster of indigenous beliefs,
Saxon and Norse beliefs, the Roman pantheon, and the rising tide of
Christianity.  It was more than a little bit of a bloodbath, and
particularly dangerous for children born to magic who were invaluable pawns to
all factions as well as something particularly valuable to kill or enslave if
you came by on a raid. 

According to tradition, it was at this time that four
powerful individuals (A Saxon warrior lord of Wessex “Godric Gryffindor” who
was a follower of Mithrais, “Salazar Slytherin” a Drai of Ui Neill, “Helga
Hufflepuff” a nun of Caledonia, and “Rowena Ravenclaw”, a priestess and queen
of Dyfed) came together in agreement that regardless of their particular
beliefs, there had to be some kind of neutral ground safe haven where magical
children could be reared and then allowed to return to their people with a
better chance of survival, otherwise Britain was going to drive her own
valuable commodity into extinction. 

What they established was a small village (later Hogsmeade)
where any person of magical blood could live under a strict oath to harm none
other of the gift, no matter their previous allegiance.  A
non-faith-specific temple was also built, with a small library that they
further developed into a school.  Children were taught Latin, which they
believed had a future as the common tongue, and selected by the followers of
each Founder as to where their greatest aptitude was felt to lie in the Four
Paths.  These were, at the time, the four general life options for a
person of magical blood: Military Champion, Healer, Scholar, or Sorcerer to a
person of power. 

Over the centuries, the village had good and bad phases, but
always managed to hang in there, and the little trade school along with
it.  The school expanded in size rapidly and by the tenth century. This is
technically the beginning of modern Hogwarts in terms of actually being a
school on what was later the school grounds. There were, at this time, about
300 or so students at any given time, with age spread between about 7 to 18 or
when their apprenticeship was over and it was time to choose a master or
husband. 

This is also when the great schism occurred with the
followers of Slytherin.  There was a strong belief among that branch of
the Drai that the Gift could only be hereditary, and if it appeared among
someone who seemed Muggle, the mother had obviously been tricked and thereby
the child was conceived in adultery and under trickery and needed to either die
or live as a curse on all they encountered.  After nearly tearing the
school and village apart, a compromise was finally reached where only pure
bloodlines would attend that track, but would still be allowed in the school in
general. 

In the 14th century, alchemy was an exceedingly popular
study, and the Renaissance and forming covens allowed access to all manner of previously
lost knowledge.  Nicholas Flamel began experimenting with immortality and
brought some of the finest minds of the time to the village school,
establishing it as a true seat of magical scholarship…and making some other
magical communities jealous to start their own.  This is also, due in part
to those experiments, the era where the House Ghosts were created (the Grey
Lady, by a slight misunderstanding, was not a biological daughter of Rowena
Ravenclaw, but a scholar-priestess sworn to her service whose order called
themselves daughters). 

The other major event of that century was the First War of
Scottish Independence, and the closest Hogsmeade ever came to discovery and
destruction.  The magic on the settlement held, but they had to pull in
tightly, abandoning the school, flocks, and lake.  An English Lord was
placed in the area, and it was Flamel who advised to allow him to build a
magnificent estate and castle before assassinating him and rendering the estate
so “haunted” that no one in their right mind would want it. 

This estate, now Hogsmeade Castle, was the intended seat of
the great magical city Flamel hoped to build.  He expanded the school and
made it mandatory for every child, insisting also on literacy, working
obsessively on the library and art/history collection, and hosting the
Wizengamot - a kind of council representing magical interests all over Great
Britain and the continent though holding no real power. It is also under Flamel
that the four different study tracks ceased to exist and a unified curriculum
was taught, though the tradition of sorting and much of the House cultures
remained.

In the era of the Black Death and following
Inquisition, Hogsmeade was one of the few settlements that grew dramatically
due to refugees…and a strict policy by the Healers of making new arrivals burn
all their belongings, shave their heads, take a series of sacred baths, and
pass through smoke. The mythos of the Founders really took shape during this
time, and the school acquired the relics of the Founders.