The origins of cabaret itself are in the smoky nightclubs of Europe in the late 1800's, where patrons gathered for eating and drinking at small tables while being entertained by musicians and a show that embraced all aspects of performance. At it's time, it was very much a counter cultural form of entertainment, and a fitting progenitor for its punk descendants.
Prior to the punk cabaret moniker, most bands that fit the bill were labeled under the more goth-oritented dark cabaret, with a sound that, while holding onto the theatrical elements, were more melodramatic and leaned toward a darker sound. Musicians like Rozz Williams, Sex Gang Children and Nin Hagen fit this title better than bands that fall under the punk cabaret sound.
The sound was accidentally but aptly named in 2003 by the Dresden Dolls, the band that typifies its sound. As the band sought to avoid being labeled as a goth band despite their white face makeup, theatrical nature and moody melodies, vocalist/pianist Amanda Palmer described their sound as a "Brechtian punk cabaret." The band quickly became known as the band that was furthering the sound.
Oft-time Palmer tourmate Jason Webley fits this style well, as do DeVotchKa, who started as a band backing burlesque shows before spreading out to become a touring band with a show that has included aerial performers. The World/Inferno Friendship Society, who's sound merges punk, soul and jazz at shows with a revolving cast of performers, and Gogol Bordello frontman Eugene Hutz has described the performances of his band that combined the energy of punk with traditional music as a "Gypsy Punk Cabaret," because the energy and party-like atmosphere of their live shows.
As Palmer moved on from the Dresden Dolls and began pursuing her solo works, as Amanda Palmer, one half of Evelyn Evelyn (along with Jason Webley), and as the frontwoman for Amanda Palmer and the Grand Theft Orchestra, she has retained the elements of raw theatricality, ensuring that no matter how her sound actually evolves, she will continue to be the queen of the punk cabaret.