Within a century from when Muhammad united the tribes of Arabian peninsula into a single theocratic state, Islamic Empire managed to spread from India to Spain, and the majority of the territory of the empire remains islamic even now, uninterrupted chain of theocratic or highly religious states from Pakistan to Mauritania. Although during the first centuries of its existence the Islamic Empire was the beacon of knowledge and philosophy for the civilized world, it went into decline at the 13th century’s rise of Ottoman Empire. Since then, religion has been slowly eroding the advances of philosophy and sciences, and taking on increasingly idiosyncratic forms. The armed conflicts between various islamic states and their neighbors gained the character of religious wars, often fueled by violent interpretations of Qur’an. Likewise, faith-based internal conflicts and persecution increased in their brutality and scale as diverse groups of Islamists, Salafists, Wahhabis, Qutbians, etc push for restoration of the religious Sharia laws and rejection of every bid‘ah, “innovation”, from science and philosophy to commerce and human rights.
I think the progress of modern Islamism begins in the 18th century, as a reaction to the decline of what was Islamic Empire, when Shah Waliullah, Abd al-Wahhab, and other prominent figures, raised their calls for jihad, the holy struggle against the enemies of the religion. In that same century, the slowly desintegrating Islamic government of Punjab (now in Pakistan) declared Sikhism, a local religious movement, illegal, and attempted to eradicate it completely, executing two brutal massacres known as the Sikh Holocausts (in 1746 and 1762), in which at least a half of their population perished.
However, most islamist conflicts were not aimed at other religions per se. Through the next century, fundamentalism became a part of muslim identity, uniting the nations to fight for independence, starting with Wahabbism which wrestled Arabic peninsula from Ottoman Empire in 1744 (to lose and regain it twice until establishing Saudi Arabia in the 20th century). Many other islamist wars for independence occurred in the 19th century, the Muslim Rebellions in China (1856-1877) or the Mahdist War in Sudan (1881-1899), the jihad of Emir Abd al-Qadir against the French control of Algeria (1830-1842), and so on.
In the 20th century the fight for independence turned into the fight against foreign influences and ideas. It gave the Islamists two major casus belli: the 1947 partition of India, where the Islamic Republic of Pakistan was created, which immediately engaged in territorial war with the Republic of India, and the 1948 creation of Israel, which was attacked the very next day by the armies of Egypt, Lebanon, Syria, and Jordan. Both wars became increasingly religious in nature, and have been alternating between open combat and sporadic terrorist acts ever since. The most recent actions in those hot spots are the Mumbai terrorist attacks by Lahore-based Lashkar-e-Taiba (The Army of the Pure) in November 2008 and the December 2008 – January 2009 attack of Israel on Gaza Strip in an attempt to reduce the power of Hamas, the islamist organization that rules Gaza since 2007. Two major 20th century successes of Islamic fundamentalism were the creation of Islamic Republic of Iran in the 1979 revolution and the establishment of Islamic Emirate of Afghanistan in 1996 in the power vacuum left by the retreat of the Soviet troops.
The beginning of the 21st century was marked by the September 11 attacks in the USA in 2001, executed by the Sunni Islamist extremist group Al-Qaeda, the terrorist act with the highest death toll in history (2974 people, excluding 19 terrorists). The USA responded by invading Afghanistan and Iraq, overthrowing the governments of both countries, but the islamist terrorist activity around the world keeps growing, with kidnappings, assassinations, hijacking, bombings, and open combat occurring everywhere from Timor to Thailand to India to Russia to Britain to Somalia to Algeria.