The distinct differences in style of theatre between Shakespeare's time and modern theatres is the fact that in the 1600's because most theatre companies were a travelling minstrel group who actually went to the inns to get their audiences the group would frequently immediately start to act. The audience would then gather by coming out onto the balcony of their rooms. They had no closed in features like a roof as they were constructed in a courtyard style. The audience would gather like a crowd to watch and therefore there was standing room only.
Today entertainment is considered a luxury and people expect to be able to relax and observe the players. Weather and climatic conditions dictate the style of theatre that is erected. Most modern theatres are geared at attracting large audiences and making them as comfortable as possible. Therefore audiences now gather in the comfort of theatres that are teared with seats rising to the back along the old ampitheatre style. Chairs are provided as we have become adapted to sitting for two or two or three hours to fully enjoy our entertainment.
Before there were theatres, there were touring acting companies. These companies did not have a building in which to perform their plays, so they toured their regions and played wherever they could rent space. Most of the time that happened to be in the courtyards of inns. The companies would erect their stage at one end of the courtyard and the inn's residents would either stand around the stage or go out on their rooms' balconies and watch from there.
The Theatre was the first permanent theatre in England, and was built by James Burbage. The shape and form of his theater was taken directly from the inns in which the acting companies performed. The Theatre was eventually torn down and The Globe Theatre was created from its parts. The same form was used, which is why it was shaped in a sort of semi-circle,