The moving image is still a relatively new art form, having less than 150 years to mature compared to writing or drawing which have developed over thousands of years. Hence, it is easy to look back on the history of film, documentary specifically, and see a microcosm of the evolution of an art. Documentary according to its name is today considered to be an accurate representation of reality, “documenting” actuality as it is and as it unfolds, but in the past this was not the case; while today we make some leeway for documentary filmmakers to interpret the meaning the reality they record, in the past, documentarists were free to not only liberally interpret reality but to alter it, replicate it, and fake it completely.
Filmmakers such as Ken Burns, who does historical documentary, and Orlando von Einsiedel, who became famous for his almost real-time coverage of the Syrian first responder group White Helmets, have given modern documentary an academic standard of honesty, but their predecessors were not as dedicated to reality.
(from pbs.org and imbd)
This is due in part to the cultural expectations that formed the milieu of early film. Documentary film was the natural successor to the 19th century market for documentary literature. Guidebooks and trip reports were popular, and hundreds of thousands of these books, based on the observations of travelers, explorers, and even simple laymen barely literate were published and were very popular. Before the moving image, these accounts were the most accessible way for a person to learn about their world. However, these books were rarely accurate – the travelers who wrote them filled their accounts with personal bias, assumptions, rumor, and often, outright lies for the sake of excitement (the shock value sells the book, after all). It was only natural that the next level of expository media, the documentary film, would follow suit, and it would take decades for it to develop the responsibly truthful standards that we expect from documentary film today.
The title page of an 1899 travel guide, “Russia on the Pacific,” published in London. Books such as this were extremely popular but often misleading as the authors rarely put any effort into verifying the factuality of their works. (from archive.org)
Based on this history of contrived exposé that characterized not only guidebooks but publications such as Frank Leslie’s Illustrated Newspaper (the illustrations of which were generally drawn by artists who weren’t even present at the event reported on), that documentary film would follow suite. Thus, Nanook of the North, probably the best-known feature documentary of early film history featured half-igloo sets, simulated seal hunts, and a forced elimination of any modern technology which by the time of filming already was an integral part of the Inuit lifestyle. Similarly, newsreels featured faked battles using miniatures, white actors in blackface acting as African hunting guides, and reconstructions of Texas murders filmed in New Jersey. The goal of early documentary, according to Bill Nichols, was exhibitionism rather than exposition, which fit very well with the excitement-hungry culture of the turn of the 20th century that valued the interest of the story over fidelity to the truth.
The interior scenes in Nanook of the North were filmed in a half-dome of snow to allow sufficient light and space for the camera to operate. While Robert Flaherty showed remarkable interest in filming the actuality of Inuit life, the fact that he wanted to document an actuality of the past meant that many of the activities filmed had to be faked.
(from Screen Shadows Group)
 Nichols, Bill. Introduction to Documentary p.91