The effect is named after the image on the tins and boxes of Droste cocoa powder, one of the main Dutch brands, which displayed a nurse carrying a serving tray with a cup of hot chocolate and a box with the same image. This image, introduced in 1904 and maintained for decades with slight variations, became a household notion. Reportedly, poet and columnist Nico Scheepmaker introduced wider usage of the term in the late 1970s.
The Droste effect was used by Giotto di Bondone in 1320, in his Stefaneschi Triptych. The polyptych altarpiece portrays in its center panel Cardinal Giacomo Gaetani Stefaneschi offering the triptych itself to St. Peter. There are also several examples from medieval times of books featuring images containing the
book itself or window panels in churches depicting miniature copies of the window panel itself. See the collection of articles Medieval mise-en-abyme: the object depicted within itself for examples and opinions on how this effect was used symbolically.