It's unfortunate that a lot of early horror films are considered lost. A number of Lon Chaney films were lost, I've heard, because Universal Studios intentionally destroyed the reels in order to recover the silver used in their manufacturing. But like fossils and artifacts, the films that remain tell us a lot about the industry and the horror genre of the time. The earliest horror film I can think of is 1922's Nosferatu, which itself is lucky to have survived after legal disputes with Bram Stoker's estate resulted in a court order that the film be destroyed.
The cinema of the time was very imaginative, exploiting black and white to great effect with shadows. If you look at The Cabinet of Dr. Caligari, a lot of the sets are clearly drawn and painted. The fiction of the time was just as evocative. There's a story by Lord Dunsany called Thirteen at Table. It's about a fox hunter who stays the night at a mansion. He goes to dinner. At the table are him, his host, and the host's daughter, along with thirteen seemingly empty seats. These, says the host, are inhabited by the ghosts of people he's wronged. The hunter entertains everyone with wonderful stories, but eventually begins worrying that he is offending the ghosts, and slips into madness. In reading it, I imagined The Haunted Mansion at Disneyland, particularly the ballroom.
As I see it, horror has evolved over the last hundred years to up the shock value. The limitation of horror is that it frightens you on the first exposure, but you're desensitized to it over time. Unless, of course, it's something you've got a genuine phobia of. For example, I still can't watch Arachnophobia because I have a fear of spiders - large spiders, in particular - and there's a shot in the climax where you see Jeff Daniels reflected off the many eyes of the spider queen, and I just can't deal with that.
I think it used to be that shock was used merely as a tool in the genre. When The Walking Dead started off, Frank Darabont said the zombies were just the icing on the cake, and that the real story was about the fragility of human society and nature. I've noticed a number of writers and filmmakers who intentionally try to shock and disgust the audience, and there's nothing necessarily wrong with that. What worries me about that is that as more people become used to it and steel themselves in preparation for the next gore-fest, horror in a hundred years' time is going to become more graphic, and maybe even border on the snuff film. If it serves a larger purpose in the story, wonderful. But if it's there just for the sake of being there, then I think it means there's a psychological problem in the audience that needs to be addressed.