Historically, some ideas have been advanced to explain the small amount of body hair in humans, as compared to other species. However, recent research on the evolution of lice suggests that human ancestors lost their body hair approximately 3.3 million years ago.
Most mammals have light skin that is covered by fur, and biologists believe that human ancestors started out this way also. Dark skin probably evolved after humans lost their body fur, because the naked skin was vulnerable to harsh African UV radiation. Therefore, evidence of when human skin darkened has been used to date the loss of human body hair, assuming that the dark skin would not have been needed until after the fur was gone.
Dr. Alan R. Rogers, an evolutionary geneticist at the University of Utah, used mutations in the MC1R gene to estimate when human skin darkened. He said humans may have gone through several genetic "clean sweeps" with light-skinned individuals dying off and dark-skinned individuals surviving. He estimates the last of these clean sweeps took place 1.2 million years ago. Therefore, humans have been hairless at least since that time.
The Savanna Theory suggests that nature selected humans for shorter and thinner body hair as part of a set of adaptations to the warm plains of the African savanna (in addition to bipedal locomotion and an upright posture). Some hold that there are several problems with this theory (including balding), not least of which is that cursorial hunting is used by other animals that do not show any thinning of hair. Nevertheless, other species likely migrated to Africa by way of a gradual process. This provided them with time to adjust to the intense UV and sunlight by way of other means (such as panting). Hominids, on the other hand, originally possessed fur, but, due to a relatively sudden change in behavior 2.5 million years ago (due to hominid inventiveness/technological innovation) that involved intense hunting during the day, they developed sweat glands that enabled them to perspire. This change necessitated the loss of most body hair in order to facilitate sweat evaporation (i.e. cool the body). Furthermore, balding usually occurs at around 30 - 40 years of age. In prehistoric times, most individuals did not live past 30. Hence it wasn't a common trait. Also, dark pigmentation of the skin could have compensated for premature baldness (although such a condition would have still been somewhat uncomfortable relative to having hair[dubious discuss]). Finally, there are indeed other African mammals that have lost fur due to equatorial heat. These include the African (and Indian) elephant, as well as the hippopotamus. Thus this theory remains the best explanation of human hair loss despite the persistence of those advocating the lice hypothesis et al.
Another theory for the thin body hair on humans proposes that Fisherian runaway sexual selection played a role. (as well as in the selection of long head hair). Possibly this occurred in conjunction during fetal/early child development neoteny such that more juvenile appearing females being selected by males as more desirable (see types of hair and vellus hair) (however, this conclusion may be more of a reflection of current standards of beauty rather than prehistoric ones).
The aquatic ape hypothesis posits that sparsity of hair is an adaptation to an aquatic environment, but it has little support amongst scientists.
In reality, there may be little to explain. Humans, like all primates, are part of a trend toward sparser hair in larger animals; the density of human hair follicles on the skin is actually about what one would expect for an animal of equivalent size. The outstanding question is why so much of human hair is short, underpigmented vellus hair, rather than terminal hair.More Details:en.wikipedia.org/wiki/Hair