During the golden age of the Jedi, the Jedi Order believed the Sith to be extinct, having died out during the Battle of Ruusan. In reality, Darth Bane survived the battle and rebuilt the Sith Order in his own vision. Bane was familiar with the tradition of betrayal amongts the Sith Lords. Through his study of the ancient Sith Wars and his personal experiences in the Sith Brotherhood of Darkness, Bane felt that the old Sith ways had resulted in nothing but devastation to those who embraced the Sith.
During the Great Hyperspace War, Naga Sadow betrayed his Sith brother in order to gain power for himself. During the rise of Darth Malak and Darth Revan, a tradition arose whereby once an apprentice was strong enough to overtake his or her Master, that Master would be killed and the apprentice would take his or her Master's place. Darth Bane knew this system was doomed to fail. Betrayal and death would not restore the Sith Empire to its former glory. Through the events of the Sith War, led by Exar Kun and Ulic Qel-Droma, Bane realized that only through cooperation and regimentation would the Sith Order have a chance to stand against the Jedi.
Darth Bane's considerations also revelaed that open warfare against the Jedi would only end in the deaths of many on both sides. The events of the Great Hyperspace War, the Sith Wars, the rise of Revan and Malak, and the emergence of the Sith Brotherhood of Darkness revealed a new strategy was needed to deal with the Jedi. Out of all of this emerged a new Sith Order. Darth Bane decreed that the days of infighting and betrayal were over. From then on, there would be no more than two Sith at a given time: a Master and an apprentice. Additionally, the Sith would go into hiding with knowledge of them falling into legend. The greatest trick the Sith ever pulled was convincing the Jedi they did not exist.
For two thousand years, the Sith traditions and knowledge were passed down from Master to apprenctice. Eventually the Master would pass on and the apprentice would take his or her own student, thusly becoming the new Master. For two thousand years, the Sith schemed and planned for their final showdown with the Jedi. For two thousand years, the Sith remained hidden from the galaxy until the time was ripe and the board was set to begin moving the pieces that would end with the destruction of the Jedi, the fall of the Republic, and the rise of the new Sith Empire.