The main thing is that prom didn't start to become big until the 1950s. This was a high water mark for conservatism in the U.S., and in order to go on any date at least one parent, usually the girl's dad, had to be present. Prom and Homecoming were the exception, so for the teens this was a big deal. The biggest thing you notice looking at the dances of this time period is that the dresses are relatively simple, because it really wasn't that big of a deal back then.
Then, those kids grew up, had kids of their own, started making movies, and on doing so impressed on the following generation that homecoming and prom were the most fun nights in all of high school. This created pressure to make your proms and homecomings be as cool as the ones your parents told you about. This led to a lot more effort being put in. Dresses got way more expensive, tuxes became pretty much mandatory, guys began doing elaborate prom-posals.
This created a big economic opening in the market. Somebody needs to make colorful dresses for the girls and tuxes for the guys. The wedding industry immediately took over this area, and homecoming and prom became rush time for that industry. Somebody needs to play music. Back in the 50s they would hire bands, but by the 70s and 80 we started getting disc jockeys and now the party dj industry is fully enmeshed in high school dances. Then there's the decorations, which became themeing, which feeds into the party industry.
Now you have the cultural snowball rolling downhill, building up speed, slowly getting bigger. It is encouraged by a growing industry that advertises to teens how cool their prom will be if they just wear this dress, and then social media happened. Now teens are advertising prom to each other, and feeling they need to be better than that TikTok they saw earlier, so the social pressure to have the coolest prom ever is more ubiquitous that it has ever been.