The first sign of a Downtown Disney was in the Walt Disney World Resort in March 22, 1975 when they opened Lake Buena Vista Shopping Village. Lake Buena Vista Shopping Village was a complex of shops and restaurants made for keeping guest from leaving the Disney property and to stay longer. Lake Buena Vista Shopping Village had a few name changes and was later named Downtown Disney Marketplace.
The Walt Disney Company wanted to make Disneyland park into a resort like Disney World so they came up with the idea to add another theme park, more hotels, and a shopping/entertainment district, thus Disneyland's Downtown Disney was born.
Disneyland's Downtown Disney District lies between the resort's two theme parks and it’s hotels. To fit it in that spot it was built on a piece of the old Disneyland parking lot (with Disney’s California Adventure) and sadly the original Disneyland Hotel that Walt Disney made had to be torn down for it to fit. Disneyland's Downtown Disney is smaller than the one in Florida and is totally free to go there.
Not just is Disneyland's Downtown Disney made to keep guest to stay longer, but it was also made to attract locals to come and experience some Disney night life. All of Disneyland’s hotels can be accessed from Downtown Disney, and the second station for the Disneyland Monorail is located there but you need a Disneyland ticket to ride it since it goes into the park. In my opinion Disneyland's Downtown Disney is better than Disney World's because it is closer to everything and it actually feels like a Disney city. Next time you visit the Disneyland Resort be sure to check out Downtown Disney. Below is the video from the Disney Parks Blog.