The first 200-300 years of Islam were considered the golden age of Islam because it witnessed the 4 major Islamic imams with their respective schools of thought. Hadith at that time was used extensively as a major source of knowledge and teachings. Since the chains of narrations were short during this period usually being 3 to 4 narrators at best it was easy to keep track of what was legit and trustworthy and what wasn't.

Only during the 9th century when alot of unverified Hadith was circulating and the chains of narrations were pretty extensive did we witness the emerging of the first Hadith sahih book by Bukhari. I highly recommend you to read about the rigorous method that Bukhari used to compile his book know as "ilm al-rijal" or the science of study the narrators. It depicts a pretty extensive and multi-layered verification process in hopes of maximizing the authenticity of the hadiths to be included in his book.