An important development that made Colossal Caves possible was the natural language parser. This was created by Joseph Weizenbaum at MIT during the years 1964-1966 for his program ELIZA. ELIZA was created to simulate a Rogerian psychotherapist. The program would prompt who ever was at the keyboard to say something about themselves. It would then use a natural language parser to search for certain key words, these would indicate which phrases the computer would use in reply, then it would formulate its response using some of those key words. In this way it could hold a conversation.
What this meant to Colossal Caves is that it expanded the field of interactivity. Not only could you direct the computer to display text about what you might find if you go left or right down a forking path, if you found described on your path a bag full of rubies you could type in instructions such as "pick up the rubies" or "throw the rubies at the monster" and the natural language parser would make it possible for the computer to give an appropriate response to your instructions. This immensely increased the audience's ability to live in the world of the story, giving them something they could not experience in any other medium.
Colossal Caves was closely followed by Adventureland in 1978 by Scott Adams which he used to found his computer game company, Adventure International; Zork in 1980 by Dave Lebling, Marc Blank, Bruce Daniels, and Tim Anderson which led to the founding of Infocom and Mystery House in 1980 by Roberta and Ken Williams was used to found what eventually became Sierra On-line.
The game Hitch Hiker's Guide to the Galaxy (1984) by Steve Meretzky made extensive use of the natural language parser in order that readers might have conversations with many of the characters from the original series of novels by Douglas Adams. This game put Infocom on the map, and the experience of speaking with the natural language parser impressed Douglas Adams so much that he has gone back to use it even more extensively in his new game Starship Titanic (1998).
Text based interactive fiction continues to be written today and with twenty years of experience, its creators really know how to make non-linear storytelling work. I can highly recommend checking out the IF archives at <http://www.wurb.com/if/index.html> . Interactive fiction's development was crucial to the eventual addition of colour graphics (as opposed to vector graphics), animation and eventually live-action sequences, as the early IF companies sought to maintain their audience's interest by expanding into new forms of adventure gaming.