The Earth's crust became stable about 3.9 billion years ago. Life appeared around 3.6 to 3.9 billion years ago, which is quite fast in astronomical terms. Microfossils found in ancient rocks from Australia and South Africa demonstrate that terrestrial life flourished by 3.5 billion years ago. Older rocks from Greenland, 3.9 billion years old, contain isotopic carbon, carbon that could only have belonged to a living organism. The early atmosphere of the Earth was a secondary atmosphere from volcanic outgassing, very CO2-rich with little free O2.
Liquid water provides a universal solvent and warm environment for chemical evolution. It is a vehicle for dissolved substances (it circulates). And it provides the raw material for protein construction.
Amino acids are small, highly reactive molecules composed of 20 to 30 HCNO atoms. When amino acids link together in strings they form proteins. Proteins govern chemical reaction rates and form the structural material for cell parts.
With the construction of large macromolecules, such as proteins and nucleic acids, the Earth is poised for the next stage of biochemical evolution. Living organisms are the supreme example of active matter. They represent the most developed form of organized matter and energy that we know. They exemplify growth, adaptation, complexity, unfolding form variety and unpredictability. Almost appearing to be a class apart from matter and energy, defying the laws that enslave normal matter and energy.
Every organism is unique, both in form and development. Unlike physics where one studies classes of identical objects (e.g. electrons, photons), organisms are all individuals. Moreover, collections of organisms are unique, species are unique, the evolutionary history of the Earth is unique, the entire biosphere is unique. On the other hand, a cat is a cat, a cell is a cell, there are definite regularities and distinguishing features that permit organisms to be classified.
Each level of biology has new and unexpected qualities, qualities which cannot be reduced to the properties of the component parts, this is known as holism. A living organism consists of a large range of components differing greatly in structure and function (heart, liver, hair). Yet, the components are arranged and behave in a coherent and cooperative fashion as though to a common agreed plan. This endows the organism with a discrete identity, makes a worm a worm, a dog a dog.
No living thing exits in isolation. All organisms are strongly coupled to their inanimate environment and require a continual throughput of matter and energy as well as the ability to export entropy. From a physical and chemical point of view, every organism is strongly out of equilibrium with its environment. In addition, life on Earth is an intricate network of mutually interdependent organisms held in a state of dynamic balance. Then concept of life is fully meaningful only in the context of the entire biosphere.
A large number of complex chemical reactions is the underlying process that we call life. The ingredients for life are:
RNA and DNA are molecular codes for the production of proteins. They have the unique property of being self-replicating (when an RNA molecule splits, amino acids connect to the endpoints producing an exact copy of the original chain). The beginning of biochemical evolution was when RNA and DNA evolved to coat themselves in protein shells. These coated RNA and DNA packages are called a virus. A virus is halfway between life and non-life, being non-living when in isolation, but adapting living characteristics in interaction with other virus' or cells.
The next stage in biochemical evolution was for various virus' to take on specialized tasks (energy production, protein production, etc). These individual elements would combine to form the first cell. Our earliest evidence of cellular life comes from fossil bacteria.
With the development of cells, life took on an explosive evolution into more diverse forms, invading new environments (sea, lakes, land).
Oxygen is a very small component to outgassing on the Earth, yet O2 is a significant fraction of our current atmosphere (thank goodness). Also note that O2 is highly reactive and combines quickly with rock and soil to form oxides (rust). Thus, the current amount O2 requires a constant process of replenishment. That process is photosynthesis.