Obviously for many years prior to the 1990's there was no distinction within any of the British leagues regarding the nationality of British players, hence why we had a big influx of both Welsh and Scots in the 70's and 80's. A lot of the European leagues had restrictions on the number of foreign players to aid tthe development of their national teams. Because of the different rules within each of the European leagues, UEFA after much resistance from all four British FA's and propagandizing from the major European FA's, UEFA introduced the 3+2 rule, in which teams could only field 3 foreign players in a team of 11, together with 2 assimilated players ( ie had played in that country for 5 years). Thus the late and great Gary Speed was one of our assimilated players and it was this rule that led to the game against Stuggart having to go to a decider in Barcelona, after Stuttgart breached that rule, when making a substitution. Gary Mac, Gordon Stachan and Cantona were classed as our 3 foreign players, although either of Gary or Gordon could have been classed as assimilated if we had required to sign a non British player.
1995 comes around and we have the Bosman ruling, which other than allowing players to run down their contracts and move to other clubs without a transfer fees being paid, also judged that the 3+2 rule was in contradiction to article 39 of the Europeans Union Freedom of Movement For Workers, thus in the 96/97 season we had 13 non English players in our squad (8 of these players being non British). The following season we had 22 non English players, 16 of which weren't British. Of our Champions League game at home to Lazio in March 2001, our starting 11 consisted of 4 English players, 1 additional British player, 3 players from Europe (All from Ireland) and 3 Australians.
This eventually led to the top leagues in England, Germany, Spain, Italy and France consisting of over 45% of non nationals playing in their respective leagues, with most of the top talent being at a select number of clubs. This also had 2 additional effects, weakening of a lot of the other member leagues within Uefa, such as the Dutch, Swedish, Belgium and Portuguese leagues together with the minor leagues of Eastern Europe as more countries were allowed to enter the EU, and also curtailed the growth of home grown talent as Ivan from some village on the coast of the black sea in Bulgaria, was just as good a footballer as Billy from Beeston, but Ivan was happy to play for £5 per month and a bowl of gruel for breakfast ( I would say journalistic licence has been applied there, except I'm obviously not a journalist

).
FIFA wished to introduce a 6+5 rule, where 6 of the eleven players in a team must be eligible to play for the nation that their club is based in. Uefa considered that this was no different to the 3+2 rule that the European Courts had previously declared illegal, and thus with the backing from the member states and the European Parliament, the home grown rule was initially introduced in European club competitions in 2005, and subsequently adopted by most of the national leagues. The Football League introduced the rule in the 2009/2010 season whilst the Premier League introduced this rule during the 2010/11 season. Because of the long standing of Welsh clubs having played in the football league before even our club was formed and the infancy of the Welsh football league, it was agreed that players who were registered between the ages of 15-21 for a period of 3 years with either a Welsh or English club would be classed as home grown within either nation. The other home nations of Scotland and Northern Ireland with already established leagues, would be treated the same as any other league within Europe.
The research for the above comes from a number of websites, but this paper from Simon Gardner of Leeds Becket University and Roger Welsh of the University of Portsmouth looks into the above in greater detail
https://www.researchgate.net/public...UEFA's_'home-grown_player_rule'_on_the_agenda