Shibuya is a city (more specifically, a special ward) occupying 15 square kilometers of west-central Tokyo. Although the name is most closely associated with one of the busiest railway stations in the world and its surrounding commercial center, Shibuya proper spreads out in every direction to cover quiet but cramped residential neighborhoods where over 200,000 people live: upscale places like Yoyogi, Hiroo and Daikanyama, less upscale places like Sasazuka, and the homeless mecca of Yoyogi Park.
The name Shibuya means "bitter valley;" during a local high-tech boom in the 1990s, many IT types cleverly called Shibuya "Bit Valley." Native speakers of English tend to pronounce the Japanese name "shuh-BOO-yuh," but the proper pronunciation is closer to "SHIH-boo-yah," and the best way to master it is to pay attention to the automated announcements in the JR station, which are exaggerated just to the right extent for this purpose.
As the name implies, Shibuya began life as a valley formed by the amalgamation of two small rivers, the Shibuya River and Uta River. It has been inhabited for about as long as Japanese history has been written, but it did not take on its current concreted-over character until after the Russo-Japanese War. For centuries it was little more than a collection of farming villages; in the Meiji era of the late 1800s the Imperial family established a farm there, where Western scientists were employed to introduce modern agricultural techniques. This farm was replaced by the expansive Meiji Shrine in 1920--today there is little evidence of the old rural character of Shibuya, other than some old maps in a gargantuan bookstore across the street from an even more gargantuan Tokyu department store.
The railway station at Shibuya was built in 1885 and had little traffic at first. Ebisu, the next station to the south on the Yamanote Line, opened in 1901 solely for the purpose of transporting beer from the Yebisu brewery there. But in 1906, with the Russo-Japanese War won and the Japanese economy on a growth spurt, the village of Shibuya suddenly exploded with activity. New railway stations opened at Harajuku and Yoyogi, and the "Tamaden" tramway (since replaced by the Denentoshi Line) began running from Shibuya to points west. In 1910, the Imperial Army opened one of its largest training grounds at what is now Yoyogi Park; the grounds were the site of the first airplane demonstration in Japan later that year. The Great Kanto Earthquake demolished much of this first round of development in 1923, but the area sprang back to life fairly quickly and continued to develop through World War II.
Today's busy Shibuya can be traced back to those days, although its character was quite different back then. Dogenzaka, a hillside behind the Shibuya 109 department store, is chock full of love hotels, strip clubs and sex shops; in the 1920s, it was one of Tokyo's largest geisha districts (so-called hanamachi or "flower towns.") Omotesando, the broad European-style avenue on the east side of Shibuya, was built up in the 1920s to accommodate visitors to the Meiji Shrine, and starting in the 1930s it was accessible from the new Tokyo subway line now known as the Ginza Line. Yoyogi Park changed hands from the Imperial Army to the United States Army in 1945, was repurposed to stage the 1964 Summer Olympics and has made a name for itself as a home for Japan's youth subcultures.
Suburban growth to the west of Tokyo helped to cement Shibuya's commercial development following World War II. Urban planners banned private railway lines from running into central Tokyo beyond the Yamanote Line, so stations along the line became key transfer points for commuters between the center city and outlying bedroom towns. Several private lines (Toyoko Line, Denentoshi Line, Inokashira Line) began running into Shibuya Station during the postwar boom, along with a second subway line (the Hanzomon Line). Yoyogi and Ebisu also became key rail-to-subway transfer points.
The result is an intense clustering of stores, restaurants, underground passageways and giant television screens around Shibuya Station, where something on the order of 1 million commuters pass through each day. Central Shibuya and the nearby district of Harajuku are favored hangouts of the young and trendy, while Ebisu and Daikanyama to the south are more popular among the older and sophisticated crowd. There are several universities in the city, including the prestigious Aoyama Gakuin University and Kokugakuin University and the politically-unique United Nations University.
Shibuya is also a hub of corporate activity in Tokyo, particularly among technology companies. Google and Microsoft have their Japan headquarters there, alongside local upstarts like Square Enix and Mixi. Yoyogi is the home of the East Japan Railway Company, the largest passenger railway company on Earth; Ebisu is the home of Sapporo Beer and the Japanese office of Morgan Stanley. Coca-Cola also bases its Japanese operations in Shibuya, and the public broadcasting giant NHK has its main studios on the south side of Yoyogi Park.
Once one leaves the Yamanote Line corridor and goes out into the residential neighborhoods, Shibuya's demographics are predominantly working age and monied. The neighborhoods of Shibuya are popular among professionals working in central Tokyo, especially wealthy expatriates who enjoy its multicultural atmosphere (and who can be compensated for the ridiculous cost of living). Besides thousands of ethnic restaurants, Shibuya also houses a number of embassies and a long list of places for worship, including Japan's largest mosque (near Yoyogi-Uehara Station), making it a popular neighborhood for the religious (including many Japanese Christians).
The development of Shibuya has been carefully controlled by this constituency of rich, powerful and socially conservative residents. In contrast with Shinjuku and Roppongi, both known for criminal elements and a massive sex industry, the red-light business in Shibuya is contained at its historical hub on Dogenzaka, and has been forced into a slow decline as the city government refuses to license new sexual enterprises. As a result, Shibuya is very safe; outside of Dogenzaka it is also squeaky clean, and even on Dogenzaka the love hotels and strip clubs are slowly being replaced by restaurants and apartment buildings. Mobster activity is not generally tolerated by the local government, which has forced organized crime out to the less activist but equally developed neighboring cities of Shinjuku and Minato.
So that leaves us with today's Shibuya: the Times Square/Piccadilly Circus scene around Hachiko Crossing, the surrounding forest of shops piled on top of each other, the surrounding forest of sidewalk cafes and condominiums, and little sign that just over 100 years ago none of it would have even been a glimmer in anyone's eye. Which is cool to think about as you have a latte at Starbucks and watch the scramble in the streets below, everyone going everywhere, driving the economy of the largest metropolis in the world.