The basic idea of the DDA was introduced in 1964 by DeVoe who applied it to study the optical properties of molecular aggregates; retardation effects were not included, so DeVoe's treatment was limited to aggregates that were small compared with the wavelength. The DDA, including retardation effects, was proposed in 1973 by  Purcell and Pennypacker
who used it to study interstellar dust grains. Simply stated, the DDA is an approximation of the continuum target by a finite array of polarizable points. The points acquire dipole moments in response to the local electric field. The dipoles interact with one another via their electric fields, so the DDA is also sometimes referred to as the coupled dipole approximation.
Nature provides the physical inspiration for the DDA - in 1909 Lorentz
showed that the dielectric properties of a substance could be directly related to the polarizabilities of the individual atoms of which it was composed, with a particularly simple and exact relationship, the Clausius-Mossotti relation (or Lorentz-Lorenz), when the atoms are located on a cubical lattice. We may expect that, just as a continuum representation of a solid is appropriate on length scales that are large compared with the interatomic spacing, an array of polarizable points can accurately approximate the response of a continuum target on length scales that are large compared with the interdipole separation.
For a finite array of point dipoles the scattering problem may be solved exactly, so the only approximation that is present in the DDA is the replacement of the continuum target by an array of N-point dipoles. The replacement requires specification of both the geometry (location of the dipoles) and the dipole polarizabilities. For monochromatic incident waves the self-consistent solution for the oscillating dipole moments may be found; from these the absorption and scattering cross sections are computed. If DDA solutions are obtained for two independent polarizations of the incident wave, then the complete amplitude scattering matrix can be determined.
Alternatively, the DDA can be derived from volume integral equation for the electric field. This highlights that the approximation of point dipoles is equivalent to that of discretizing the integral equation, and thus decreases with decreasing dipole size.
With the recognition that the polarizabilities may be tensors, the DDA can readily be applied to anisotropic materials. The extension of the DDA to treat materials with nonzero magnetic susceptibility is also straightforward, although for most applications magnetic effects are negligible.
There are several reviews of DDA method.