"Historic Drama," as I use the term, is a class of plays based on real events of rocking significance.
Many playwrights will create drama based on real events in their own lives, but these works aren't historic drama, because they don't matter to anyone else until the play is performed. Then the drama becomes a work of art in its own right. But because the event is isolated to a few individuals, these works are not historic drama.
Historic drama may be written years, decades, centuries after the events they depict. They may refer to ancient history. Or they may refer to events that are going on right now or in the recent past, and which continue to have a direct impact on the audience's day-to-day lives.
Playwrights will create historic drama for three basic reasons: to use the past to throw light on the present, to use the present to throw light on the past, or to draw the audience's attention to current events.
To Use the Past To Throw Light On the Present
This first reason is extremely common. Some playwrights believe our society is essentiallly cyclical, and that the problems of the past reflect the problems of the present. By showing how our ancestors fixed their problems, the playwrights believe they can offer reasonable solutions for the present. Sometimes, by showing how our ancestors FAILED to fix their problems, playwrights hope to prevent society from following the same blind alley twice in the same way. Some critics believe this may have been Sophocles' intent when he wrote Oedipus Rex (Oedipus the King), and the trend continues to the present day.
This category encompasses three broad categories. The first is iconoclasm. Mythology builds up around historical figures when those who knew them personally die off. George Bernard Shaw, Saint Joan (Penguin Classics). And when an event in history becomes larger than life and mythical, sometimes it's necessary to tell the truth about it so that no one is ever able to pretend bad things never happened. Charles Fuller, A Soldier's Play (Dramabook).
The second category in this heading is reflection. Sometimes the prejudices, snap judgements, and blind spots of an era prevent people living through them from really knowing and understanding what's happening in front of them. And sometimes attitudes just change, for no other reason than that we've simply had enough time to think about what the past means. Moises Kaufman, Gross Indecency: The Three Trials of Oscar Wilde. Maybe we realized something we thought was obvious in the past is a little more complicated. Or maybe we realize that we were previously finding nuances that weren't there because we didn't want to accept the truth staring us in the face. Robert Bolt, A Man for All Seasons: A Play in Two Acts. Either way, seeing events of the past replayed in the present allows us to investigate what we, or our ancestors, used to think, and by investigation, understand.
The third category in this heading is fairly rare these days, but was once common. Sometimes events of the past are very mysterious and we want to try and understand what really happened. This is a very old notion. You can see it in classic works like Shakespeare's Richard III (Folger Shakespeare Library) and Marlowe's Edward II to contemporary plays like Frayn's Copenhagen and Democracy: A Play. Frankly, it's a shame you don't see this sort of thing more often these days, but writers have become fond of hard facts in their historic drama; educated guesses have fallen out of fashion.
To Draw the Audience's Attention To Current Events
Writers often have their eyes and ears wide open to the world around them. They must do so if they want to capture human nature in a clear manner. Because of this, writers often have strong opinions about current events. Writers as ancient as Aristophanes have written plays like Lysistrata (Dover Thrift Editions) about the current events that got their dander up.
It is risky for writers to use current events and living people in their plays. Events recent enough to be at the front of the audience's brain run the risk of being controversial and earning the playwright some enemies. After all, think about today's front page headlines. No matter what you think about events, you probably know five people who think you're wrong.
But playwrights who are bold enough to take on live issues have created some of the best work in theatre. Plays about living people and recent events are very much in the present tense and can be very eye-opening. And if you ask just such a playwright why they write about their chosen subjects, they will tell you it's quite simple: they often think controversy is both productive and downright fun.