I have been working on the web since before IE 1.0 came out.
IE 1 - 3 Were garbage compared to what Netscape was offering at the time
IE 4 was substantially better than Netscape Navigator. With IE 5 crushing it as Netscape imploded.
Microsoft was late to the game but threw everything at it to crush their competition. They had much better technology once they got to IE 4.
(They also used other business tactics to run Netscape out of business with OEM agreements and giving away their web servers).
The CSS we complain about - Microsoft invented it. The Browser wars took HTML from a markup that didn't even have tables to close to what we have today.
The Standards were a joke. Each browser came up with innovations and then copied their competitors. Standards were an after effect of what web developers adopted (down with Blink).
Websites were best with IE or best with Netscape.
Once Microsoft drove Netscape out of business they just sat there and didn't put any effort into it like any Monopoly - there was no reason to.
The Standards bodies created a host of specs CSS 2 and 3 being some of the most important that differed from what Microsoft had in IE. This was different from the rubber stamping of the
implementations we had before during the browser wars. I suspect a combination of better design and(just sour grapes - do it differently just because). Microsoft largely ignored the standards,
in their mind they were the only browser and were the standard.
So IE just sat there with a slow release cycle and no desire to implement the standards - they had VML implemented so why bother with SVG - a paper spec when they have an actual implementation for years.
Microsoft was busy trying to address all the security problems of their features first mentality with the trusted computing initiative and not making any forward progress on functionality.
So While Microsoft idled, Firefox and WebKit/Safari grew. The Standards bodies continued to work now they were a head of the browsers now, not way behind.
Microsoft woke up to see its market share slipping and suddenly It's Browser wars II
Now Microsoft has a couple of problems keeping up
1) Backward compatibility - this is arguably a good thing as it keeps you from breaking old stuff, but also makes fixing older 'quirky' behavior.
2) Release cycle tied to OS - the slow release cycle compared to the opensource alternatives means their browser is always behind.
3) Standards games - It's not all Micosoft's fault - the standards bodies don't always play fair. Why does IE not have Canvas? When every other browser does? Because Apple has a patent on it. Apple's agreement with W3C is to license that patent once it becomes a standard (not just a proposal) but until canvas is an official standard, Microsoft is open to lawsuit if they implement it. But while the all the other browsers are implementing Canvas (opensource bodies don't have any cash to lose if Apple files a lawsuit ) their not pushing it through the standards commitee to make it official. This leaves Microsoft as the odd man out.
The IE team is working hard to catch back up, but the above 3 points are holding them back. Windows 7 is a decent OS so finally we have a chance of replacing all those OEM Windows XP computers still running IE 6.