Neurons coding a particular movement reduce their responses with time of exposure to a constantly moving stimulus; this is neural adaptation.
Neural adaptation also reduces the spontaneous, baseline activity of these same neurons when responding to a stationary stimulus (see, for example, Barlow & Hill, 1963; Srinivasan & Dvorak, 1979; Glasser, Tsui, Pack, & Tadin, 2011).
The first clear specification of the motion aftereffect was by Jan Evangelista Purkyně (1820), who observed it after looking at a cavalry parade.
Robert Addams (1834) reported the waterfall illusion after observing it at the Falls of Foyers in Scotland.
According to Wade, Thompson, and Morgan, (2014), the most comprehensive single article on the phenomenon is by Gustav Adolf Wohlgemuth (1911).