I think the first major improvement was when manufacturers settled on what is today pretty much the standard configuration: Two large traction wheels in back, steering wheels in front, with the operator riding between the rear wheels. If you get a chance to see some of the pre-war designs, there were a lot of horrible configurations. Some were even steered by reins, like the tractor was a team of horses.
The internal combustion engine was a big improvement over steam, but it was inevitable once it took hold in automobiles that it would be the engine of choice in farm tractors.
Certainly the three-point hitch was a major development for safety and utility. And the power takeoff was a big step forward from belt pulleys. (belts being a holdover from steam engine days.)
I would say that pretty much all improvements in tractor technology have been evolutionary rather than revolutionary. Automatic transmissions, hydraulics, power steering, electric starting, four wheel drive all came about because the technology was available. Very few developments originated with tractors. The Ferguson 3-point hitch system is a notable exception.
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Today's Featured Article - History of the Nuffield Tractor - by Anthony West. The Nuffield tractor story started in early 1945. The British government still reeling from the effects of the war on the economy, approached the Nuffield organization to see if they would design and build an "ALL NEW" British built wheeled tractor, suitable for both British and world farming.
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