Short answers, pulled from the story.
William Blake wrote the poem as part of his epic work Milton: A Poem in Two Books with a title page dated 1804. Historical records indicate the actual printing occurred later specifically in 1808.
The phrase entered the English language from this specific preface though its meaning has sparked decades of scholarly debate. Some readers interpret these mills as references to the early Industrial Revolution and its destruction of nature while others argue they symbolize the established Church of England or abstract concepts within Blake's personal mythology.
Sir Hubert Parry set the text to music for a Fight for Right campaign meeting that took place at London's Queen's Hall on the 28th of March 1916. He wrote the manuscript on the 10th of March 1916 and handed it to conductor Walford Davies.
The Royal Albert Hall hosts thousands of singers every year who perform this hymn as part of the closing ceremony during the Last Night of the Proms. In 2010 Team England held a public poll where Jerusalem won with 52% of the vote over Land of Hope and Glory and God Save the Queen.
Millicent Fawcett of the National Union of Women's Suffrage Societies requested its use at a Suffrage Demonstration Concert held on the 13th of March 1918. Parry orchestrated the piece specifically for this concert after originally composing it for voices and organ.