The distinction between art and craft extends back several centuries to the 16th century, according to the College of Saint Elizabeth website. With the establishment of English, French and Italian art academies came the distinction between craft and art. Craft, according to the rules set forth by these institutions, indicated an object that was made to be functional and decorative. Fine art, which includes painted portraits and sculptures of the human figure, was not useful, but rather made for beauty and visual consumption only.
Ceramic pottery, glass, fiber, metal works and jewelry have been traditionally called crafts because of their utilitarian purposes and qualities. New graphic forms like graphic and package design, posters, logos, industrial design, web design and urban design would fall into this category as well, but as Fichner-Rathus pointed out, the distinction between these types of crafts and fine arts has become blurred.
According to Lois Fichner-Rathus in "Understanding Art," the differences between fine art and functional objects finds its roots in the historical and cultural contexts in which these works were created. Before 16th century artists created a distinction between the two, society held artists in very little esteem. For example, in ancient Greece, the seed civilization for all of Western art, Greek philosophers said that craftspeople fell in the social order somewhere between artists and philosophers. The implication was that crafts and therefore craftspeople were useful. Artists were not.
However, in some cultures no difference between art and craft exists. For example, Native American tribes do not distinguish between fine art and crafts. In fact, items like moccasins were highly decorated and wore only on special occasions in tribal affairs. Additionally, some of the greatest cultures in art history are left out of the fine arts category under this strict guideline. Almost all of traditional Islamic art falls in the decorative arts or crafts category. Persian rugs, ceramics, enameled glass and embellished metalworks as well as manuscript illumination are counted among the artworks of this culture. Because of the restrictions placed on art in Islam---meaning that no person, animal or god can be featured in Islamic art---the art of this culture must necessarily fall into the craft category. If the restrictions of art versus craft were placed on the art from cultures such as these, rich cultural traditions in art history would be overlooked.
Fichern-Rathus calls the difference between fine art and crafts an artificial and limiting one. Works of art like the pottery found from ancient cultures like Greece, China or the Middle East have their place in fine art---alongside more traditional "fine art." Starting in the 1970s with the rise of Feminism, this belief has gradually begun to lose its place in the art world. Modern artists seek to expand their voices and often employ the materials of crafts like clay or glass to express their artistic visions.