In this century, we have come to understand that the formation of the Solar System is intimately tied to star formation (the sun's formation), but that has not always been so. How the solar system formed has been debated since the XVIIth Century. In 1644, Descartes proposed the nebular theory or model, meaning that the sun was surrounded by a large disc of gas from which the planets and their moons formed. About a century later, Baron George de Buffon (1749) suggested that the planetary part of the solar system had formed from being ripped out of the sun by a passing comet (later on, others suggested that it may have been a near collision with another star rather than a comet). This is called the catastrophic or collision model. In the latter part of the XVIIIth Century, Kant and Laplace both supported the nebular model and this model was dominant until the mid-XIX Century when Maxwell calculated that because of the different rotation rates, planets could not form out of a disk of gas and the collision theory held until the 1930s. In the latter half of this century, astronomers have generally agreed on the nebular model, especially in view of the understanding of stellar formation and life history. 

From what we know today we are fairly certain that, a little less than five billion years ago, there was a cold clump of mostly Hydrogen and Helium, up to perhaps a light year across and some 1.5 to 2 solar masses, slowly rotating in one of the spiral arms of our galaxy. Some of its material had condensed into molecules and dust. And then came the shock wave from a nearby supernova. As this shock wave came through, it compressed a part of this clump, and caused it to begin to collapse. At the same time, it enriched this clump in heavy elements from the supernova (about 1.5%). 

As collapse began, the rotation of the clump began to increase. As gravity pulled the matter together and increased its density, it began to assume the shape of a central ball with a disc of matter extending along its equatorial plane. This is because the rapidly rotating materials along the equatorial plane were kept out by the “centrifugal force” while the more slowly rotating materials were pulled towards the central concentration. The net shape that results is very similar in appearance (not size) to that of spiral galaxies. The central ball like portion evolved into a star, our sun, that began to go through the various life stages that all stars go through, while the material in the disc evolved into the planets. 

At the same time that the overall nebular material contracted to form the bodies of the solar system, nuclei and molecules began to condense into particles and dust. As the central ball went through the protostar stage it began to heat up the surrounding disc, and, of course, the inner part of the disc heated more than the outer part. This difference in temperature prevented more volatile materials, smaller atoms, and molecules such as ice from condensing close to the protostar, favoring heavier materials rich in heavier elements such as Iron and Silicates. Also, as the sun evolved from a protostar into a main sequence star it began to emit a strong solar wind that swept all gas and dust that had not yet condensed to become part of the inner materials towards the outer reaches of the solar system. 

As the molecules and dust particles collided, especially where matter was densest along the midplane of this disc, they grew into increasingly larger bodies, some eventually reaching hundreds of miles in size, called planetisimals. As they gained more and more mass from these collisions, they were also compacted by their own gravity. Heated by gravitational contraction and the decay of radioactive particles, they melted and differentiated. Over time, the planetisimals themselves collided and merged, and as they grew, the larger ones attracted smaller ones with their increased mass and gravity, to eventually form the inner protoplanets. Heated by the energy of the planetisimal collisions, contraction and the decay of radioactive materials, the larger bodies (Mercury, Venus, Earth and Mars) underwent melting, and gravitational differentiation. From there, they cooled to become the inner planetary bodies. The specific mechanics associated with the moon are somewhat unclear, but there are indications that the moon may have been formed from the impact of the proto-earth that had already undergone differentiation with another protoplanet about the size of Mars. The grazing impact created a ring of debris in orbit around the earth, that eventually re-aggregated to form the moon, which in turn underwent a melting episode. 

The further out one moves in the disc, the colder the surrounding. In the outer parts of the solar system, the temperatures are much lower and the planetisimals were rich in ice. As they accreted they heated, and the ice vaporized, but the lighter atoms such as Hydrogen and Helium became part of the outer protoplanets. Due to their rapid spin, the outer protoplanets themselves probably became miniature solar systems; and it is from their secondary discs that their extensive satellite (moon) and ring systems actually formed. 

Because all the planets formed from the disc material, their orbits follow along the plane of the original orbital disc and are nearly flat. Thus they also revolve in the same direction as the original rotation of the disc. There is also a regular spacing pattern between the planets (Bode’s Law), excepting that there should be a planet that lies where the asteroid belt is. The fact there are only asteroids and not a planet makes sense if we think about Jupiter’s size. Because of its large mass, Jupiter disturbed the planetisimals in its vicinity enough so that only a few remained to form today's asteroids rather than another planet. These planetisimals whose orbit had been disturbed by Jupiter in turn impacted planets and moons, all of which show the after-effects of an extensive phase of bombardment that pretty much came to an end by 3.8 BY ago (although there are still occasional collisions today).