One reason I believe anime became so popular around
the world is that it's a medium that's free to
tell dramatic stories involving violence, death,
love and even sex, which was a big change over the
days when American cartoons were overseen by
parental watchdog groups to ensure they contained only
"wholesome values." While anime has always been
well stocked with stories about giant robots,
transforming magical girls and sports heroes,
there's always been a dark sub-genre hiding in the
shadows which most fans eventually encounter in
one form or another. This is the genre of overtly
sexual animation known as hentai in the
West, though this word just means "perverted" or
"abnormal" in Japanese, without any reference to
animation or otaku culture. (In case you were
wondering, Japanese would just use the term
juu-hachi kin anime or "anime that anyone
under the age of 18 is forbidden from watching,"
which is a bit of a pun since it also sounds like
the word for "18 carat gold.")
The idea of ero-themed art is nothing new, of course:
Japan's 300+ year tradition of 春画 shunga
("spring pictures"), based on earlier influences from China, could probably make Hugh Hefner blush.
The modern "hentai" genre began taking shape in the mid 80s with the classic Cream Lemon, a series
of loosely related stories created by the top creative talent of the day, directors and animators and character designers who also worked on Mobile Suit Gundam,
Macross, and other mainstream shows. While Akira, Sailor Moon
and Gundam Wing were bringing mainstream anime to fans around the world, ecchi titles like
Urotsukidoji/Legend of the Overfiend, La Blue Girl and Bible Black were
introducing the steamy side of animation. While Japanese know their popular culture is somewhat
unique in the world, they're generally unaware that many associate their country with, say, "naughty
tentacles," or that comedians like Jon
Stewart make
jokes about them.

Some thoughts on the history of hentai.